Election Betting on Prediction Markets, Special Education, Breastmilk Storage

**Scott Simon** (0:02)
Prediction markets take plenty of bets on the outcome of elections. Some bettors might be cheating.

**Ayesha Rascoe** (0:07)
Campaign staffers are awfully tempted to turn their insider knowledge into money.

**Scott Simon** (0:13)
I'm Scott Simon.

**Ayesha Rascoe** (0:14)
I'm Ayesha Rascoe, and this is Up First from NPR News.

**Scott Simon** (0:20)
Well, Kalshi and other prediction markets try to police themselves and keep the government out of their business.

**Ayesha Rascoe** (0:27)
And, as the Trump administration dismantles the Department of Education, people with disabilities and their families ask what will happen to special education.

**Scott Simon** (0:37)
And finally, mothers have been told for years to throw out any breast milk left over in a bottle after feeding. Some influencers disagree.

**Ayesha Rascoe** (0:45)
So stay with us. We have the news you need to start your weekend.

**Scott Simon** (1:01)
Americans have bet more than a billion dollars on election so far.

**Ayesha Rascoe** (1:05)
Some of those traders are using insider information. The largest prediction market, Kalshi, says it's trying to stop political insiders from profiting with a new program.

**Scott Simon** (1:16)
And here's Luke Garrett joins us. Luke, thanks for being with us.

**Luke Garrett** (1:19)
Good morning. Thanks for having me.

**Scott Simon** (1:20)
A few months back, you reported that some campaign staffers made thousands of dollars in insider trades. So what do we know?

**Luke Garrett** (1:28)
For one, we know that dozens of campaign staffers are still trying to bet on their own candidates. And remember, this is during an active midterm election year. These are people who are on campaign payrolls and are trying to profit on their own races. We know this because Kalshi has a new surveillance program that uses federal election commission data to track these staffers. So far, the prediction market says it has successfully blocked dozens of campaign staffers from making these potential insider trades.

**Scott Simon** (1:53)
How does the program work?

**Luke Garrett** (1:54)
So basically, Kalshi finds the names of staffers listed in these FEC disclosures, and then tracks them on their own prediction market. Here's how the company's head of enforcement and legal council, Robert Denald, explained it.

**Robert Denald** (2:06)
If we're able to identify a potential match, we have markets that are associated with each of the campaigns that are flagged, and those individuals would be prevented from placing trades on those markets.

**Luke Garrett** (2:17)
So in theory, Scott, this tracking program blocks any bet made by campaign staffer listed in this FEC data.

**Scott Simon** (2:25)
And what are the holds?

**Luke Garrett** (2:26)
There are a few. So at least one campaign staffer listed in FEC data was able to trade on an election they were involved in. This staffer shared their records of their Kalshi bet on the condition of remaining anonymous for fear for future employment. But beyond this one case, there are also some serious structural issues in Kalshi's monitoring program. Two former FEC commissioners told me this program won't capture everyone who has insider information on a campaign. I think volunteers, lawyers, pulsars and even subcontractors. Here's former FEC chair, Sean Cooksey.

**Sean Cooksey** (2:58)
While I think this data may be helpful in giving some picture about who is working on a particular campaign, it is by no means a complete one.

**Luke Garrett** (3:07)
But Cooksey says this program is a step in the right direction and he applauded the company for it. Back at Kalshi, Denald acknowledged that no system is airtight and that they hoped to make it more effective. Kalshi's top competitor, PolyMarket, declined an interview request for this story. PolyMarket did send a statement saying they investigate all possible insider trades.

**Scott Simon** (3:27)
The prediction markets tell you that they're policing themselves. Is the government doing anything?

**Luke Garrett** (3:34)
The Commodity Futures Trading Commission oversees and regulates prediction markets. Under the Trump administration, the CFTC has done little to regulate these new financial markets, largely leaving that work to the companies themselves. Trump-appointed CFTC Chairman Michael Selig has even defended prediction markets against dozens of lawsuits from states seeking to really reign in these markets. But two former CFTC commissioners I've spoken with say current law and regulation hasn't kept up with prediction markets. And this unsettled legal landscape could make it easier for insider traders to get away with it.

**Scott Simon** (4:07)
Does Congress have a role here?

**Luke Garrett** (4:09)
Yes. So lawmakers from both parties have said the CFTC and its outdated rules aren't fit to regulate these new markets. This year alone, 21 pieces of legislation have been introduced, though none of them have really gained much momentum.

**Scott Simon** (4:22)
And here's Lou Garrett. Thanks so much for being with us.