Kalshi introduces Nasdaq oversight: a new stage for the prediction market

Prediction exchange Kalshi integrates Nasdaq's market surveillance system to enhance market security and maturity amid growing trading activity.

In June 2024, news broke about a strategic partnership between the prediction market exchange Kalshi and technology giant Nasdaq. Kalshi is implementing the advanced Nasdaq Market Surveillance system to improve the detection of insider trading, manipulation, and other types of market abuse amid growing trading volumes and an expanding product line. This event reflects not only a technological upgrade but also the institutional maturation of the prediction market sector. Kalshi and Nasdaq: What’s Behind the Partnership Kalshi is a licensed prediction market exchange where users can trade contracts on the outcomes of political, economic, sports, and other events. In June 2024, Kalshi announced the start of a multi-year partnership with Nasdaq, under which the Nasdaq Market Surveillance system will be implemented on the platform. This technology is already used by more than 50 exchanges and has been approved by 20 international regulators, including the U.S. Commodity Futures Trading Commission (CFTC), which began implementing a similar platform in 2023. The rollout will be phased and will cover both standard event contracts and perpetual-style derivatives. This will allow Kalshi to use cross-market and cross-asset monitoring tools that are standard on traditional financial markets. According to Lindsey Osgood, Senior Sales Manager at Nasdaq Financial Technology, the partnership will give Kalshi access to advanced analytical tools that allow for tracking suspicious activity not only within a single contract but also across different markets and products. How the Nasdaq Market Surveillance System Works Market surveillance is a set of technologies and procedures aimed at detecting suspicious trading schemes, insider trading, price manipulation, and other violations of market ethics. Unlike simple monitoring of individual trades, the Nasdaq system can analyze relationships between different contracts and assets. For example, a trader might try to disguise their strategy by spreading positions across several markets or products, or manipulate one market for profit in another. Nasdaq’s technology can reconstruct order book activity and identify complex behavioral patterns. Additionally, integration with Nasdaq will make it easier for Kalshi to transmit trading data to the CFTC in the required format, which is important for regulatory compliance. Tony Sio, Head of Regulatory Strategy and Innovation at Nasdaq, noted that the growth of the prediction market sector makes it necessary to implement surveillance infrastructure capable of handling increasing volumes and trading complexity. Response to Increased Oversight and Real-World Cases The Kalshi-Nasdaq partnership did not happen by chance—the prediction market sector has recently come under close scrutiny from lawmakers and regulators due to suspicions of insider trading and manipulation. In July 2023, the CFTC fined former Congressman George Santos $35,000 for manipulating a Kalshi contract related to his attendance at the President’s State of the Union address. Additionally, Reuters reported an investigation into a White House staffer responsible for the teleprompter, who allegedly traded using insider information about upcoming Donald Trump statements. In both cases, the suspicious activity was detected by Kalshi itself and reported to regulators. This shows that the exchange already has its own surveillance system, which is now being enhanced with Nasdaq’s solutions. For years, Kalshi has been developing an internal monitoring system called “Poirot” and previously integrated Solidus Labs technology. According to the company, these systems use pattern recognition methods to automatically flag unusual trades, after which the compliance team checks the client’s identity, funding sources, and trading history. In February 2024, Kalshi reported that over 200 investigations had been opened in the past year and accounts linked to suspicious activity were frozen. The Nasdaq platform will serve as an additional layer on top of Kalshi’s existing tools, providing scalability, institutional expertise, and deeper cross-market analysis as the product line expands and the number of participants grows. The Significance of the Partnership: More Than Just Image Partnering with Nasdaq brings Kalshi not only reputational benefits. It strengthens the exchange’s position in the debate over the status of prediction markets: Kalshi aims to be recognized as a regulated exchange, not just a betting platform with minimal oversight. However, it would be a mistake to see the agreement as merely a PR move. As the exchange grows, the number of interconnections between contracts increases faster than the number of contracts themselves. This complicates monitoring, especially when trading is continuous and covers politics, economics, sports, cryptocurrency, and corporate events. Surveillance systems sufficient for small venues may not cope with such volume and speed. No technology can fully prevent insider trading, and detecting suspicious trades is only the first step. Investigations and sanction decisions require people, professional judgment, and a willingness to refer cases to regulators. Moreover, even the most advanced system does not resolve the fundamental legal question: which event contracts are even permissible for trading. Nevertheless, the partnership with Nasdaq is an important step forward. As prediction market expert Tanner Lux notes, sustainable development of such markets is impossible if ordinary traders believe that sharp price swings are regularly caused by access to non-public information. The perception of fairness is directly linked to liquidity: participant trust is essential for maintaining it. Kalshi is demonstrating by example that the prediction market sector is moving from merely borrowing the terminology of traditional exchanges to actually implementing similar infrastructure, working with the same regulators, and adopting standards of market transparency. Context: What Are Prediction Markets and Why Do They Matter? Prediction markets are exchanges where users trade contracts on the outcomes of future events. For example, you can buy a contract on whether a certain candidate will win an election or whether U.S. inflation will exceed a certain level. The contract price reflects the probability of the event occurring, as estimated by market participants. If the event happens, the contract pays out a fixed amount; if not, it pays nothing. Kalshi is one of the few platforms licensed by the CFTC to organize trading in such contracts in the U.S. This sets it apart from many less regulated venues and highlights the importance of meeting strict market surveillance requirements. Implementing Nasdaq systems is another step toward bringing prediction markets closer to traditional financial institutions. For traders, this means a higher level of protection against manipulation, trading transparency, and confidence that suspicious trades will be detected and investigated. Results and Statistics: Key Facts Kalshi is implementing Nasdaq Market Surveillance as part of a multi-year partnership announced in June 2024. Nasdaq technology is already used on more than 50 exchanges and approved by 20 international regulators, including the CFTC. In 2023, the CFTC fined George Santos $35,000 for manipulating a Kalshi contract. Reuters reported an investigation into a White House staffer suspected of insider trading on Kalshi. In 2023, Kalshi conducted over 200 internal investigations and froze accounts linked to suspicious activity. The implementation of Nasdaq Market Surveillance will allow Kalshi to track cross-market schemes and transmit data to regulators in the required format. What This Means for PPPoker Club Players For members of PPPoker clubs, this news serves as a reminder of the importance of transparency and fairness at all levels of the online gaming industry. Even though PPPoker is not a prediction market in the classic sense, the adoption of advanced surveillance systems by leading platforms influences security standards and player expectations across the sector. First, players should understand that modern technology makes it possible to detect complex manipulation schemes and insider activity, even when spread across different products and markets. This means that attempts to circumvent the rules or use insider information are becoming less effective—and more punishable. Second, Kalshi’s example shows that mature platforms invest in market surveillance tools not just to comply with regulations, but also to maintain user trust. For PPPoker players, this is a signal: choose clubs that care about game integrity, use modern monitoring methods, and are ready to respond to suspicious activity. Finally, the development of market surveillance in related sectors highlights that the higher the level of transparency and control, the more attractive the platform is for the mass player. This contributes to increased liquidity and game stability, which in the long run benefits all members of the PPPoker club ecosystem.