Over the weekend, Republican gubernatorial candidate Kyle Langford placed a bet on himself that he would become California’s next governor. He also asked his followers to place their own bets on his victory as a show of support.
I just bet $100 💵 that I, Kyle Langford will be the next Governor of California, join me
(if you believe 🙏🏻) 😎 @Kalshi🐻✝️🇺🇸 https://t.co/XMk25PuDVr pic.twitter.com/A67hRZb2Za
— Kyle Langford (@KyleLangfordCA) May 24, 2025
The eyebrow‑raising trade and call for additional bets quickly sparked questions about market integrity and Kalshi’s know-your-customer protocols, including from Dustin Gouker via Substack.
In a statement to Prediction News, Kalshi said:
“We are aware of the recently publicized circumstance regarding a candidate trading on a market regarding their candidacy, and our compliance and surveillance teams are acting accordingly.”
After noting that as a CFTC-regulated exchange, Kalshi investigates and “as appropriate, adjudicates all potential violations of its Rules,” the company stated:
“Kalshi does not give public comment on the status of ongoing investigations. The outcome of such an investigation, or any pursuant notice of charges or discipline, may become public via exchange notice. While we can’t comment on the specifics of this circumstance, we are proud to be a regulated exchange with obligations and infrastructure ready for situations exactly like this one.”
In Kalshi’s rulebook, Rules 5.15(x) and 5.15(y) prohibit “Insiders” with “material non-public information” or those who have “any influence” on the outcome of the event the contract is based on from trading in those markets. While candidates for office were not listed in Kalshi’s trading prohibitions, these rules clarify that candidates for public office should be unable to trade on their own races.
A thin market, a big swing
Langford’s price rose from 5 cents to a high of 28 cents before falling to 12 cents on Saturday evening. By Monday morning, his price returned to the original value of 9 cents. The market only had about $2,600 in trade volume on Monday, a small amount of money that allows an influx of trades to skew prices for a few hours. While this shows that prediction markets can recover from short-term price fluctuations, the episode also revealed a blind spot in Kalshi’s know-your-customer protocols.
Kalshi usually has a “trading prohibitions” section on political race markets. Its market on Nevada’s gubernatorial race, for example, includes a section that lists individuals prohibited from trading in that market, including “members of federal or statewide public office” or “paid campaign staffers on gubernatorial campaigns.” Kalshi’s market on California’s governor had no such trading prohibitions section, though its full rules still apply to each market.
Langford betting raises market integrity and manipulation concerns
There is currently no evidence that Langford sold his contracts during the price spike. However, a platform giving a political candidate the ability to profit from a short-term price spike creates an opportunity for legal grift that also undermines market integrity.
Langford’s call for wagers seemed to have been answered on Saturday. There were 12 transactions that bought “Yes” contracts on a Langford victory on May 24. In a small market with only about $2,600 in trade volume, these purchases made up a significant portion of activity in the market, allowing them to have an immediate impact on contract prices.
Hedging, forecasting, or grifting?
During the 2024 presidential election, and in the weeks after, Kalshi touted itself as a platform for discovering truth. Its presidential market favored Trump more than traditional electoral polls, which underestimated Trump’s support for the third cycle in a row.
However, the strength of Kalshi’s presidential election forecast came from the vast amount of publicly available information about the state of the race. There were many points of view to aggregate into a “Yes” and “No” price. Markets with little publicly available information, like the recent Pope market, may produce prices, but they’re not reliable without traders who know important pieces of information.
Event contracts can also be used as insurance. Though a minority of traders use speculative contracts this way, contracts can pay out if a portfolio manager wants to hedge against a specific event.
However, event contracts were never designed to double as self-enrichment methods for political candidates. Kalshi’s investigation—and any discipline that follows—must show the exchange can identify and block these users. How it handles Langford’s wager will be an early test of Kalshi’s ability to bar prohibited traders and deter future abuses.
