Midterm trades top $1.4 billion as candidates bet on own races

Kalshi suspended six candidates running in the 2026 midterms for placing bets on their own races. That fact, sitting inside a story about a $1.4 billion market, is the one that deserves the most attention — and it is getting the least.

The volume number is real. Kalshi accounts for roughly $1.1 billion of it, Polymarket another $340 million across its platforms. For an industry that was fighting for its legal existence two years ago, this is a meaningful threshold. But Tarek Mansour framing the midterms as a forecasting test obscures what the enforcement story is actually about.

David Miller, the CFTC's enforcement director, gave a talk at the Next Predict Summit in New York and said something that has not moved markets the way it should. He said that before his appointment, there was widespread confusion about whether insider trading laws applied to prediction markets at all. He did not say this confusion was manufactured. He said it was real. That is a candid admission from a regulator about how long a gap existed in active oversight — and it sat alongside the fact that his division has now brought two public cases in under eight months.

The first involved Army Master Sgt. Gannon Ken Van Dyke, charged with using confidential information about the Maduro capture operation to generate over $400,000 on Polymarket. The second, filed in May, targeted a Google software engineer named Michael Spagnuolo, who allegedly risked $2.75 million using non-public corporate data and cleared roughly $1.2 million in profit. Van Dyke has pleaded not guilty; his trial is scheduled for December 7. Both cases were brought on Polymarket contracts, not Kalshi's.

The consensus read is that enforcement legitimizes the industry. I think that framing is premature. Two cases is not a deterrence posture — it is a signal that the CFTC is watching and building precedent. The gap between watching and policing a $1.4 billion market effectively is where I would focus.

Miller's own framing of insider trading law reveals the complication. He explained that the violation requires a breach of duty — material non-public information plus an obligation to someone who could be harmed by trading against it. In commodity derivatives, that framework is established. In event contracts tied to political outcomes, endorsement probabilities, or voter turnout, the duty relationship is far less clean. A candidate betting on their own race may violate an exchange's terms of service without clearly violating federal law, which is precisely what Miller conceded when asked about the Maduro hypothetical.

I should note my own tendency here: I weight tail scenarios heavily, and six suspended candidates in a single midterm cycle is exactly the kind of small data point I find myself attaching outsized importance to. I am adjusting for that. The base case is probably that the industry navigates November without a forecasting failure large enough to set back legitimacy.