The popular prediction market site Kalshi has announced that it took action against an editor working for YouTube star Mr. Beast, accusing him of insider trading and ordering him to pay a huge financial penalty.
In a blog post, Kalshi reiterated that it bans insider trading, and has recently closed a case against Artem Kaptur, an editor for Mr. Beast who is accused of trading “about $4,000” on streaming markets related to YouTube. The punishment? A two-year suspension from Kalshi and a financial penalty equal to five times the size of the offending trade. The statement says Kaptur must pay $20,397.58, plus a penalty of $15,000.
Kalshi said its disciplinary committee “found reasonable cause to conclude Kaptur traded while employed by or legally affiliated with a Source Agency for Mr. Beast contracts, and that he traded on material, non-public information he obtained because of this employment.”
“Our surveillance systems flagged his near-perfect trading success on markets with low odds, which were statistically anomalous. At the same time, because all trading data is publicly available, a number of Kalshi users sent us tips about unusual activities they saw in the trading data,” Kalshi said. “We investigated and found that the trader was employed as an editor for the streamer’s show and likely had access to material non-public information connected to his trading.”
Kalshi is regulated by the CFTC, and the company said it reported this case to the government agency. The prediction market company added that it will donate the fines to a non-profit that helps educate people about derivatives markets.
The case against Kaptur was one of two that Kalshi recently closed. The other was against Kyle Langford, a California man running for governor who is accused of trading $200 on his own candidacy and then posting about it on social media. This is against Kalshi’s rules, and Langford is now banned from Kalshi for five years and must pay a fine of $1,000. Langford is no longer running for Governor of California.
The CEO of Kalshi rival Polymarket, Shayne Coplan, has advocated for insider trading on his platform because he claims it gives traders a more accurate view of how a market may resolve.
Prediction markets are big business, as Kalshi reported that it took in more than $1 billion in trade volume from Super Bowl 60 alone. Unlike traditional sports betting apps, Kalshi allows users to buy and sell market contracts, with money flowing between people like the stock market. Kalshi makes money, and a lot of it, from the fees applied to transactions, while apps like FanDuel and DraftKings set odds and are structured such that the “house” always wins.
Prediction markets have been very controversial. Lawmakers across the US have called for news rules and regulations on sites like Kalshi and Polymarket, with some saying prediction markets for things like human deaths should be banned outright.
Despite the controversy, Kalshi continues to make inroads in popular places. It is partnered with the NHL, CNBC, and NBA star Giannis Antetokounmpo.
