Activist Group Says Kalshi’s Election Market Should Be Shut Due to ‘Manipulative’ Whales

In
its
long-running
legal
fight
to
offer
event
contracts
on
U.S.
elections,
Kalshi

regularly

emphasized
it
is
a
regulated
exchange,
in
contrast
to
its
much-larger,
crypto-based,
offshore
rival
Polymarket.

That
hasn’t
stopped
Better
Markets,
an
activist
group
that
advocates
for
stricter
financial
regulations,
from
citing
activity
on
Polymarket
as
one
reason
to
stop
Kalshi
from
letting
traders
make
political
bets.

In
a
39-page
friend-of-the-court

brief
filed
Wednesday
supporting
the
Commodity
Futures
Trading
Commission’s
appeal
of
a
case
the
regulator
lost
to
Kalshi,
Better
Markets
noted
recent
reports
about
a
handful
of
Polymarket
accounts
that
have
made
bets
worth
tens
of
millions
on
Donald
Trump
winning
the
presidency.
(Polymarket
confirmed
to
the
New
York
Times
this
week
that
these
accounts
are
all

controlled
by
the
same
French
national.)

Better
Markets
repeated
theories,
floated
in
Wall
Street
Journal
and
Newsweek
articles,
that
the
Polymarket
whale
could
be
manipulating
the
market
or
trying
to
create
a
false
impression
of
momentum
for
Trump,
in
order
to
influence
the
election’s
outcome
or
give
him
a
pretext
for
challenging
the
results
if
he
loses.

“If
the
trading
amounts
to
any
one
of
these
species
of
election
or
market
manipulation,
then
it
is
also
likely
to
artificially
skew
the
pricing
of
contracts
in
a
way
that
is
divorced
from
election
‘fundamentals,’
thus
creating
volatility
that
will
undoubtedly
harm
many
smaller
retail
investors
who
have
placed
their
own
bets,”
Better
Markets
said,
urging
the
U.S.
Court
of
Appeals
to
overturn
a
lower
court’s
decision
that
freed
Kalshi
to
offer
election
markets.

“Allowing
election
gambling
contracts
to
trade
threatens
to
undermine
election
integrity,
harm
countless
investors,
and
burden
the
CFTC
with
an
inappropriate
duty
to
police
elections,”
the
group
said,
reiterating
common
arguments
against
political
prediction
markets.

However,
Filip
Pidot,
a
prediction
market
veteran
and
board
member
of
the
Coalition
for
Political
Forecasting,
said
there
is
“virtually
no
chance”
the
French
trader
is
placing
these
bets
for
electoral
purposes.

“I
think
the
motives
are
clearly
profit-driven,”
Pidot,
who
has
been

closely
tracking
the
whales’
activities
on
his
blog,

The
Super
Model,
told
CoinDesk.
“If
the
goal
was
to
move
the
price,
you’d
do
the
opposite”
as
the
French
national.

“Instead
of
having
several
accounts
trading
strategically
with
limit
orders,
you’d
just
keep
plowing
money
in
blindly
and
let
yourself
get
filled
at
worse
and
worse
prices,
since
that
would
be
optimal
if
your
goal
was
to
artificially
inflate
the
price,”
he
said.

Polymarket
told
the
Times
the
trader
was
“taking
a
directional
position
based
on
personal
views
of
the
election”
and
it
found
no
evidence
of
attempted
manipulation.

While
Polymarket
has
seen
billions
in
volume
this
year
from
political
betting,
Kalshi
had
to
sit
on
the
sidelines
until
this
month,
when
the
appeals
court
lifted
an
administrative
stay
pausing
the
company’s
election
contracts.

Thursday
afternoon
in
New
York,
both
platforms
showed
Trump
ahead,
with
a
62.5%
probability
of
winning
on
Polymarket
($2.1
billion
in
volume)
and
59%
on
Kalshi
($60
million).
So
did

PredictIt
(58%,
about
$10
million)
and
Manifold
Markets
(58%,
play
money).