Kalshi adds trade surveillance amid $36B lawsuit

Kalshi has partnered with compliance technology provider Comply to help financial firms monitor employee activity on prediction markets as the platform expands its institutional business while fighting a multibillion-dollar lawsuit in New York.

Kalshi adds employee trade surveillance

The partnership will integrate Kalshi trading data into Comply’s regulatory software, according to CNBC. Financial firms using the compliance platform will be able to track whether employees are trading event contracts and determine if those positions comply with internal policies.

The monitoring tools are designed to help employers identify suspicious activity, including trades that may involve material non-public information. Companies can also use the system to enforce restrictions on contracts linked to events that employees could influence or know about before the public.

Kalshi already operates an internal market surveillance program. However, conversations with institutional clients showed that firms wanted direct access to employee trading data through the compliance systems they already use.

The planned integration would place prediction market contracts alongside assets such as stocks, bonds and cryptocurrencies that are routinely covered by workplace trading controls. Kalshi also expects the system to monitor its planned perpetual futures products once those contracts become available.

Why compliance matters for prediction markets

Employee monitoring could address a major concern for banks, asset managers and other regulated financial firms considering prediction market exposure. Event contracts can cover elections, economic data, corporate developments and other outcomes that may involve sensitive information.

Traditional financial firms generally require employees to disclose brokerage accounts and receive approval for certain trades. Applying similar controls to prediction markets could make it easier for those companies to permit limited participation without creating an unmonitored source of regulatory risk.

The partnership also gives Kalshi a way to present its contracts as regulated financial products rather than conventional bets. Chief Executive Tarek Mansour recently compared the company’s structure to Nasdaq while defending its business during an Aug. 3 CNBC interview.

However, stronger private surveillance does not settle the wider legal debate over whether certain event contracts fall under federal derivatives rules or state gambling laws. That dispute has become central to Kalshi’s expansion in the United States.

Kalshi faces $36B New York lawsuit

New York Attorney General Letitia James sued Kalshi on July 31, seeking at least $36 billion in damages, penalties and other relief. Mansour said the state’s allegations could threaten the broader event contract industry.

Kalshi removed the proceeding from state court to the U.S. District Court for the Southern District of New York shortly after the complaint was filed.

New York Supreme Court Justice Melissa A. Crane then treated the state’s request for a preliminary injunction as moot because the case was no longer before her court, according to records shared by gaming law attorney Daniel Wallach. The procedural decision did not dismiss or reject the state’s allegations.

The Commodity Futures Trading Commission has also sought federal court intervention to prevent state enforcement against federally registered prediction market operators. Meanwhile, court disputes involving sports event contracts continue to test where federal oversight ends and state gaming authority begins.

Santos case shows surveillance stakes

Kalshi’s monitoring push follows a CFTC settlement involving former U.S. Representative George Santos. Regulators found that Santos made misleading public statements while holding contracts tied to whether he would attend President Donald Trump’s State of the Union address.

Under a July 31 order, Santos agreed to return $17,569.98 in trading gains, pay a $17,500 civil penalty and accept a three-year ban from trading through CFTC-registered entities. He neither admitted nor denied the agency’s findings or legal conclusions.

Kalshi referred Santos’ activity to regulators, showing how platform surveillance can lead to federal enforcement. The Comply partnership would extend part of that oversight to employers, giving institutional clients another way to detect conflicts before they develop into regulatory cases.

The rollout comes as Kalshi seeks approval for additional derivatives products. Its ability to attract financial firms will likely depend on both the effectiveness of its compliance tools and the outcome of legal challenges over prediction markets in the U.S.