Summary

There are, broadly speaking, three ways to make money on a prediction market. One is to be better than everyone else at aggregating public information about possible future outcomes. The second is to be clairvoyant.  The third is to know the future because you control the outcome. 

Maybe you helped write the script, film the ending, or edit the final cut.  Kalshi—the regulated prediction market that lets you buy and sell contracts on whether things will happen—recently announced a disciplinary action that illustrates why the third method is frowned upon from a compliance perspective. 

According to Kalshi, an employee of YouTube creator MrBeast traded in markets tied to MrBeast-related content outcomes with “near-perfect” accuracy in low odds markets. Impressive maybe, but also, statistically speaking, suspicious — particularly if the trader has access to non-public information about how the YouTube video ends.

Kalshi fined the individual roughly $20,000, suspended him from the platform for two years, and referred the matter to the U.S. Commodity Futures Trading Commission (“CFTC”), which has jurisdiction over prediction markets. What this means (for now) is that prediction markets are real markets, and “knowing or controlling the outcome” is not a recognized investment thesis.

The Prediction Market and the Flagged Activity

Kalshi operates a prediction market where users may place bets on future events.  Prediction markets have become wildly popular and Kalshi alone lists more than 200,000 active event contracts.  Users can place bets on a wide variety of events, including political and entertainment events, economic data releases, and, relevant here, performance or outcome-based events tied to public content.

In late February 2026, Kalshi’s internal monitoring flagged trading accounts with unusually high win rates in markets connected to MrBeast content. Essentially, “no one is this good.” This mirrors equity and futures exchanges, which rely heavily on pattern recognition and data analytics to ferret out suspicious trading. Modern market surveillance is less about catching someone whispering in a hallway and more about noticing that someone wins 92% of the time in markets with 50/50 odds.

The trader at issue was a video editor within the MrBeast production team. If you are editing a video and know the outcome, you are in possession of information that is both (1) material to a contract that pays out based on that outcome and (2) non-public until the video goes live. That combination typically means insider trading in financial markets.  And in fact, Kalshi treated the conduct as insider trading under its rules, sanctioned the account, and notified its regulator, the CFTC.

In a February 25 announcement, Kalshi reported that it initiated over 200 insider trading investigations in the past year, with 12 still ongoing. On the same day, the CFTC issued an advisory applauding Kalshi’s action and reinforcing its own authority to police insider trading on prediction markets.

But Is This Really Insider Trading?

In traditional securities law, insider trading requires trading while in possession of material non-public information in breach of a duty of trust or confidence. That doctrine developed around stocks, earnings, mergers, and so forth. But the animating principle is simpler: markets are supposed to price public information. If someone is pricing secret information, the market is not functioning as designed.

Kalshi is not a securities exchange and prediction markets complicate the analysis slightly because there typically isn’t a company whose internal financial performance determines the payout.  Instead, the payout is based on whether some external event happens. 

But in the MrBeast situation, the event isn’t purely external.  The event outcome (e.g., what MrBeast will do or say in upcoming content) may be determined internally before it becomes public.  In that sense, the YouTube production team functions like the issuing company; the production team creates or controls the outcome, determines the contract payout, and some insiders know the outcome before the public does.

So even though there is no corporate issuer, there is (1) non-public information that is (2) material to the payout and (3) the trader had access by virtue of a relationship of trust. If a contract is regulated and a trader uses confidential information to obtain an unfair advantage, regulators view that as a problem. Whether the underlying event is a quarterly earnings release or the outcome of a stunt video is, legally speaking, secondary.

But what (and to whom) is the duty owed in this case?  Contractual duties to Kalshi (based on its terms of use) as well as to the trader’s employer.  As it explained in its Notice of Disciplinary Action in the MrBeast matter, Kalshi prohibits insider trading and trading by any user who is an employee or affiliate of a “source agency” for a contract, defined essentially as the source of the information that determines whether a contract is in the money. (Rule 5.17(y).)  And Kalshi Rule 5.17(z), invoked in a second disciplinary action against the same user, prohibits a user from trading on an event where the trader is the decision maker or has influence on the outcome of the event. 

Although not referenced in Kalshi’s disciplinary actions against the trader, the CFTC might premise an insider trading action on an obligation of trust and confidentiality the trader owed to his employer, that is, the production entity that created the nonpublic information. That said, insider trading, which requires a breach of duty, is just one possible theory available under the general antifraud provisions of the Commodity Exchange Act and the CFTC can pursue an action so long as conduct was deceptive or manipulative.

Why This Matters (Beyond YouTube)

This case is interesting not because it is about MrBeast (although that does it make interesting), but because it expands the intuitive scope of insider-trading risk. Historically, insider trading compliance lived in public companies, hedge funds, and banks. Now it may also live in:

• Media production companies
• Political campaigns
• Influencer studios
• Data providers
• Anyone whose internal information maps onto a tradeable contract

If there is a market pricing your output, and you know something the market does not, you have a compliance issue.

Practical Compliance Takeaways

1. Expand the Definition of “Insider.” If your organization generates information that could affect securities prices, commodity futures, event contracts, or prediction markets, then employees with access to that information should be treated as potential insiders.
2. Consider Blackout Rules. If an organization’s internal data determines an event outcome (e.g., product launch timing, video content results, polling data), companies should consider: (1) prohibiting trading in related contracts; (2) requiring pre-clearance; and (3) mandating disclosure of trading accounts.
3. Train Creative and Operational Staff. People in media and entertainment often do not see themselves as market participants. But if their work product is tradeable, they are.

The Broader Regulatory Signal

Kalshi’s referral of the matter to the CFTC signals a few things. First, that prediction markets expect to be treated like serious firms.  Second, that platforms will police insider conduct to maintain credibility. And third, that regulators may view event-contract trading as squarely within existing anti-manipulation frameworks.  This is therefore not so much a novelty enforcement problem as an old doctrine applied to a new asset class.