Kalshi, a regulated exchange offering event contracts on U.S. elections, has been under fire from activist group Better Markets. Better Markets is calling for the shutdown of Kalshi’s election market due to concerns over potential manipulation by whale traders. The group pointed to reports of large bets being placed on Polymarket, Kalshi’s offshore rival, as evidence of market manipulation.
Polymarket confirmed that the accounts responsible for these large bets are controlled by a single French national. Better Markets raised concerns that this whale trader could be attempting to manipulate the market or create a false impression of momentum for Donald Trump in the upcoming election. This could potentially influence the election’s outcome or provide Trump with a reason to challenge the results if he loses.
In response to these allegations, prediction market veteran Filip Pidot dismissed the idea that the French trader’s motives were electoral. Pidot suggested that the trader’s actions were profit-driven rather than politically motivated. He noted that if the goal was to manipulate the market, the trader would take a different approach.
Despite these concerns, Polymarket stated that the trader was simply taking a directional position based on personal views of the election and denied any evidence of manipulation. The platform has seen significant volume in political betting this year, while Kalshi was only recently allowed to offer election contracts after an administrative stay was lifted by the appeals court.
As of Thursday afternoon, both Polymarket and Kalshi showed Trump leading in the election odds. Polymarket had a 62.5% probability of Trump winning, with $2.1 billion in volume, while Kalshi had a 59% probability with $60 million in volume. Other prediction markets like PredictIt and Manifold Markets also showed Trump ahead in the odds.
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In conclusion, the controversy surrounding Kalshi’s election market highlights the challenges of regulating prediction markets and the potential risks of market manipulation by large traders. It remains to be seen how regulators will address these concerns and ensure the integrity of election betting markets in the future.