Polymarket and Kalshi Grapple With A New Class of Insider Trader

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News. I'm camping outside the Super Bowl Stadium with this listening device for the next few days. You can bet on how long the national anthem will be.

**Sarah Holder** (0:14)
Back in February, the TikToker, Kayden Booth, thought of a way to game the Super Bowl. He wanted to make a wager on the prediction platform Polymarket about how long it would take Charlie Puth to sing the national anthem.

**Denitsa Tsekova** (0:28)
He figured out when the rehearsal for the Super Bowls are happening. He figured out when the artists are flying. He was tracking private jets, other jets, and just figuring out all the travel.

**Sarah Holder** (0:39)
That's Denitsa Tsekova, a cross-asset reporter covering global markets at Bloomberg.

**Denitsa Tsekova** (0:44)
He waited 12 hours in total. In the end, he managed to be outside on a public sidewalk, listening to the rehearsal of the national anthem and timing it with a stopwatch in hand.

**Sarah Holder** (0:56)
Caden would go on to bet more than $50,000 based on this estimate.

**SPEAKER_1** (1:00)
So I hammered under 117 seconds and waited to the Super Bowl to see if we won.

**Sarah Holder** (1:04)
And on game day, he won big, when the anthem came in at 104 seconds long.
Mohsin isn't a casual Polymarket trader. He's more like a power user. And his Super Bowl wager became part of a larger conversation about what constitutes a fair trade on the platform.

**Denitsa Tsekova** (1:36)
So there were so many posts questioning whether this is insider trading. You know, half of the responses were like, oh, this guy's super smart. He went there, he did his job, nothing is insider. The other people were like, oh, this is pushing things too far.

**Sarah Holder** (1:48)
Polymarket explicitly forbids betting with stolen or confidential information, relying on illegal tips, or placing wagers on events where you can influence outcomes. Cayden's bet didn't appear to cross any of those lines.
But a Bloomberg Business Week analysis of Polymarket transactions flagged as suspicious by the analytics firm Polysites, found that in the first six months of this year, potential insider trades have been on the rise, especially insider trades with geopolitical implications.

**Leonardo Nicoletti** (2:21)
We saw that a majority of these trades are concentrated in Iran War and Venezuela, geopolitical markets.

**Sarah Holder** (2:29)
That's Leonardo Nicoletti. He's on Bloomberg's data visualization team. And he worked on the analysis with Denitsa.

**Leonardo Nicoletti** (2:35)
There are tens of millions of dollars in bets on those markets. And some accounts, usually a very small share of accounts, have made huge profits on those markets.

**Sarah Holder** (2:48)
Denitsa says the stakes of using insider knowledge to inform prediction market bets are getting higher than ever.

**Denitsa Tsekova** (2:55)
If I can make money on a market that is connected with violence, with attacks, terror and all that, if I have an incentive to do that, that gets pretty dark, right?

**Sarah Holder** (3:07)
And now, regulators and the platforms themselves are starting to rethink where the lines between questionable and illegal should be drawn.

**Denitsa Tsekova** (3:15)
We're used to treating insider trading when it comes to bonds, stocks and like, you know, if I'm a Microsoft employee, it's a common sense that I cannot do so much trading on the stock if I have insider information. So, what the rules are not ready for is like binary outcome contracts on pretty much everything in the world. There are so many platforms that are tracking this activity, but the users have been getting more sophisticated.

**Sarah Holder** (3:44)
I'm Sarah Holder and this is The Big Take from Bloomberg News. Today on the show, prediction markets have opened the door to gambling on everything from celebrity wedding details to the timing of military strikes. They've also created a new kind of insider trader, one that US regulators and the platforms themselves are racing to stop.
Leo, Denitsa, both of you have been reporting on the wild world of prediction markets, sites like Polymarket and Kalshi, where people can bet on binary outcomes in the real world. You've specifically been looking at the rise of insider trading on these platforms. So first, how do prediction markets like Kalshi and Polymarket define insider trading?

**Denitsa Tsekova** (4:33)
I think the main thing is non-public information. It's important how you get it, especially if you get it in a legal way that breaks even more rules. Even tipping, like if I work at a certain company where I have information, I give it to you, that is also considered illegal. But it has changed a lot.

**Sarah Holder** (4:52)
Tracking suspicious transactions on these platforms can be difficult, in part because it's hard to know who exactly is making these traits. Kalshi is primarily based in the US., which means it's regulated by the Commodity Futures Trading Commission. It requires customers to verify their identities to use the site. But Polymarket has a US market and an international exchange, which isn't regulated by the CFTC.