Prediction market enforcement explained, with Kalshi's Robert DeNault

Prediction markets face constant questions about insider trading, and Kalshi's head of enforcement Robert DeNault walks through how a market investigates it. Host Dustin Gouker first runs the news with InGame's Daniel O'Boyle: celebrity ad deals and Kalshi's court losses.

In this episode

• Kalshi's surveillance flags anomalies such as an exceptionally high win rate; analysts review the alerts, most are false positives, and serious cases go to the CFTC, and in serious cases DOJ, as referral packets (30:53, 31:07, 31:26).

• DeNault calls the CFTC's settlement with George Santos "pretty fast" for a federal regulator, and says Kalshi makes dozens of referrals on a regular basis, which does not mean a lot of cases (33:12, 34:34, 34:57).

• He says Kalshi is the first exchange he knows of to put preventative blocks on certain individuals, where stock exchanges have mostly policed insider trading after the fact (36:01, 36:21).

• On penalties, he says the usual formula is typically about 2x profit, and warns that small retail traders should not be punished more severely than heavyweights (41:20, 42:51).

• He says AI and machine learning help surveillance teams cut out noisy alerts, and smaller exchanges can use National Futures Association surveillance tools (54:57, 55:45).

• In the news segment, the hosts discuss LeBron James' Polymarket partnership and Novig's Sydney Sweeney ad, which the host says drew tens of millions of views (2:22, 6:28, 6:52).

Episode from The Event Horizon Podcast by Dustin Gouker, published on YouTube.