Feb 27, 2026 Over the last eighteen months there has been a substantial buzz around event contracts. A shift in sentiment from United States regulators at the Commodity Futures Trading Commission (“CFTC”) has opened a proverbial floodgate of new registrant applications. As of the date of this publication two primary designated contract markets (“DCM”) with accompanying designated clearing organizations (“DCO”) are stealing most of the spotlight. These exchanges are Kalshi and Polymarket. Each of these exchanges are now supporting billions in transactional volume and have tens of thousands of users. Turnkey Trading Partners has been at the forefront of this development as the leading United States regulatory consulting specialist for this sector. The following article covers what we know today, and what we are still learning, about insider trading and market manipulation as it pertains to event contracts. What is CFTC Insider Trading? Insider trading is typically a form of market manipulation more classically associated with securities transactions. It is relatively rare to see charges of this type in the CFTC or National Futures Association (“NFA”) regulated environment. Commodity Futures and Options manipulation is more classically associated with cornering markets due to physical material supply and demand constraints. It is much more difficult for insiders to have unique private knowledge about commodities relative to privately or publicly traded securities. This paradigm is changing quickly. With event contracts falling under the jurisdiction of the CFTC and NFA, a full rethink of insider trading is occurring. Take for example the following three incidents which have occurred within the past 90 days. The YouTube “Near-Perfect” Success Case (February 2026) In a major recent enforcement milestone, the regulated exchange Kalshi (under CFTC oversight) sanctioned an individual for using material non-public information (MNPI) to trade on pop-culture outcomes. The Incident: An editor for a major YouTube streamer (Artem Kaptur) was flagged for “near-perfect” success on low-probability event contracts related to the streamer’s video content. The Manipulation: The trader used advance knowledge of video releases and their content—information obtained through his employment—to place sure-win bets before the public could react. Regulatory Impact: Kalshi issued a $20,000 fine and a two-year ban, reporting the matter to the CFTC. This case is significant because it proves that “insider trading” rules apply not just to corporate earnings, but to any “event” that serves as the underlying for a contract. The CFTC has described this activity as similar to insider trading, falling under the same legal prohibitions on misappropriation of confidential data obtained through a position of trust. The Political Candidate Self-Betting Incident (May 2025 – Feb 2026) This case highlights the risk of “decision-maker” manipulation, where a participant has direct control over the outcome they are betting on. The Incident: Kyle Langford, a candidate for Governor of California, traded on his own candidacy and promoted the trade on social media. The Violation: Under CFTC principles, a person with “direct or indirect influence” over an outcome is prohibited from trading those contracts. The CFTC and Kalshi viewed this as a breach of market integrity, as the candidate could theoretically take actions to intentionally win or lose to satisfy a financial position. Regulatory Impact: The trader received a five-year ban and a fine equal to 10 times the initial trade size. This serves as a warning on “conflict of interest” rules within event markets. The “Venezuelan Capture” Anomaly (January 2026) This incident triggered a renewed push for rulemaking by the CFTC regarding geopolitical event contracts. The Incident: A trader on Polymarket turned a small position into a $400,000 profit by betting on the capture of Venezuelan President Nicolás Maduro just hours before it occurred. The Concern: The timing was so precise that it suggested the trader had access to non-public military or diplomatic intelligence. Regulatory Impact: CFTC Chairman Michael Selig cited this specific “suspiciously well-timed bet” as a catalyst for withdrawing previous rule proposals. The agency is now drafting new standards to address the “misappropriation” of government information for trading purposes, a direct parallel to the Blaszczak line of insider trading cases in traditional markets. What are the Rules and Regulations for Insider Trading? While the term “insider trading” is more commonly associated with securities, the CFTC has robust anti-fraud and anti-manipulation authority that covers similar misconduct in the derivatives markets. The core of this authority comes from the Commodity Exchange Act (CEA) and regulations adopted thereunder. Specifically, CFTC Regulation 180.1, which is modeled after the SEC’s Rule 10b-5, makes it unlawful for any person, in connection with a swap or futures contract, to intentionally or recklessly use any “manipulative device, scheme, or artifice to defraud.” This includes making untrue statements of material fact or omitting material facts. The CFTC has made it clear that its anti-manipulation and anti-fraud provisions apply to event markets just as they do to other commodity derivatives. In February 2026, the CFTC’s Division of Enforcement issued an advisory emphasizing that misconduct in prediction markets, including the misuse of material non-public information, falls under its jurisdiction. A key concept here is the “misappropriation theory” of insider trading. This theory, which the CFTC has been applying, holds that a person commits fraud when they misappropriate confidential information for trading purposes, in breach of a duty owed to the source of the information. This duty can arise from an employment relationship, a contractual agreement, or other relationships of trust and confidence. For event contracts, this means that individuals who have access to non-public information about the outcome of an event, and have a duty to keep that information confidential, are prohibited from using it to trade. This applies to a wide range of scenarios, from a YouTube editor knowing a video’s content before its release to a government employee having access to sensitive diplomatic information. Furthermore, CFTC Regulation 1.71 addresses conflicts of interest for futures commission merchants (FCMs) and introducing brokers (IBs). This regulation requires firms to establish policies and procedures to separate research and analysis functions from trading activities to prevent potential bias. This concept of creating “informational partitions” is crucial in preventing the misuse of sensitive information within a firm. What are major DCMs and DCOs doing to combat potential insider trading? Designated Contract Markets (DCMs) and Designated Clearing Organizations (DCOs) are on the front lines of detecting and preventing insider trading and other forms of market abuse. They have a self-regulatory responsibility to monitor trading on their platforms. To fulfill this responsibility, major exchanges like those in the CME Group have dedicated market surveillance teams. These teams are responsible for: Monitoring trading activity for any unusual or suspicious patterns. Detecting and preventing market manipulation. Ensuring the orderly liquidation of contracts. Many DCMs and Swap Execution Facilities (SEFs) contract with third-party regulatory service providers like the National Futures Association (NFA) to perform these surveillance activities. These providers offer a range of services, including trade practice and market surveillance, investigations, and disciplinary matters. In addition to in-house teams and third-party providers, exchanges are increasingly relying on sophisticated technology to monitor their markets. Firms like Nasdaq, NICE Ltd., and Bloomberg L.P. offer advanced trade surveillance systems that use AI-driven analytics to detect potential market manipulation and insider trading in real-time. These systems can monitor trading across multiple asset classes and provide automated alerts for suspicious activity. The CFTC itself has recently tapped Nasdaq to provide market surveillance technology to enhance its own oversight capabilities. How can you protect your organization? Turnkey Trading Partners is the leading consulting firm for event contract applications and is familiar with all the custodial and introduction models being leveraged today. Turnkey is at the forefront and is a thought leader with regard to how CFTC and NFA compliance manuals and controls must be built and established in this sector. We are working with leading firms to properly consider the technological and regulatory implications of insider trading as a form of market manipulation within the event contracts space. Turnkey is regularly engaged with National Futures Association staff, industry regulators, and other thought leaders on this topic. As our Turnkey has noted in previous articles, there is a need for an “attitude change” for some firms, particularly smaller ones, to keep up with the evolving regulatory landscape. If your firm is considering pursuing event contract brokerage or trading, this is a new threat that must be considered. Internal controls must be built with the proper surveillance tools to ensure compliance with existing regulations and those which will surely be written to combat this increasingly prevalent issue in the days ahead.