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The Kalshi insider trading allegations against a White House teleprompter operator expose a basic flaw in political prediction markets. A market is supposed to reward the trader who makes the best forecast, but that premise collapses when one participant allegedly has the president’s script sitting in front of him.

Gabriel Perez, President Donald Trump’s longtime teleprompter operator, is under federal investigation over trades tied to more than a dozen presidential speeches. Investigators believe Perez used advance access to Trump’s prepared remarks to win more than $100,000 through Kalshi markets asking whether the president would mention specific words or subjects.

The Kalshi insider trading case is more serious than a White House employee finding a clever way to make money. It raises questions about whether political insiders should be allowed to trade on events they prepare, influence or know about before the public.

Kalshi says its surveillance system detected the suspicious activity and referred the trades to the Commodity Futures Trading Commission. The White House initially placed Perez on unpaid administrative leave and later said he would no longer work there.

Reuters reported that Kalshi froze Perez’s account before more than $90,000 in profits could be withdrawn. Regulators have also discussed a settlement that could require him to surrender the profits and stop making similar trades.

Trump’s Words Became a Tradable Event

Kalshi allows users to buy and sell event contracts that pay according to whether a specific outcome occurs. Its “Mentions” markets let traders wager on whether a public figure will use a particular word, phrase or topic during a speech.

Those markets turn political language into a commodity. A trader does not need to predict whether a policy will succeed or whether Congress will pass a bill. The person only needs to determine whether Trump will say something such as “China,” “tariffs” or another listed term before the event ends.

For ordinary users, that determination may involve studying Trump’s previous speeches, current events and the announced subject of an appearance. Perez allegedly had a different advantage because he typically reviewed Trump’s prepared remarks and handled last-minute changes before the president spoke.

Perez has operated Trump’s teleprompter since the 2016 campaign and reportedly had final access to many prepared speeches. Investigators believe he placed trades connected to a December primetime address, Trump’s World Economic Forum appearance, the State of the Union and remarks during a Medal of Honor ceremony.

The Trader Allegedly Had More Than a Forecast

Advance access to a script would not guarantee a winning trade because Trump frequently departs from prepared remarks. That unpredictability reportedly became part of Perez’s trading strategy rather than a meaningful obstacle.

Investigators found instances in which Perez allegedly exited positions during a speech after Trump skipped scripted language containing a word Perez had bet would appear. The reported activity suggests he was not simply using general knowledge of the president’s speaking habits.

He allegedly knew which words were written into the prepared remarks and could respond when the live delivery moved away from the script. That combination of advance knowledge and real-time access gave him an advantage unavailable to traders watching from outside the White House operation.

Perez reportedly acknowledged making some of the trades during an interview with regulators. The CFTC referred the matter to federal prosecutors in Manhattan, but prosecutors declined to open a criminal investigation, according to sources familiar with the case.

That decision does not establish that the alleged Kalshi insider trading was permissible. The CFTC may still pursue civil enforcement, and settlement discussions reportedly included returning the profits and prohibiting similar activity.

Prediction Markets Depend on Unequal Information

Every functioning market contains participants with different amounts of information. One trader may follow politics more closely, understand polling better or react to breaking news faster than another.

That informational advantage is part of ordinary market competition. The problem begins when someone obtains material information through a job or relationship carrying a duty not to use it for personal gain.

A White House employee with advance access to a presidential speech is not merely better informed than the public. The employee received the information because the government trusted that person to perform an official duty.

The Kalshi insider trading allegations make that distinction especially important because mention-market outcomes may be partly controlled by the people trading on them. A speechwriter can place a word in the draft, a teleprompter operator can see the final script and an event producer may know which topics were removed before the audience hears anything.

The public is no longer betting against another person’s political judgment in that situation. It may be trading against someone who already has the answer or helped create it.

CFTC Rules Can Reach Prediction-Market Insiders

The Kalshi insider trading investigation does not involve stocks, confidential earnings or an undisclosed corporate merger. It involves event contracts regulated under the Commodity Exchange Act.

Kalshi operates as a federally regulated contract market under the Commodity Exchange Act. The CFTC has said its antifraud and antimanipulation authority applies when someone misappropriates confidential information in violation of a preexisting duty of trust.

The regulator describes that conduct as insider trading even when it involves an event contract rather than a company’s stock. It has also warned that people may violate federal law when they trade on events they can directly or indirectly influence.

That does not mean every employee who knows something about a future event automatically commits a federal offense by trading. Regulators would still need to examine the information, the trader’s duty, the market rules, the intent behind the trades and whether the conduct involved fraud or manipulation.

Perez has not been found liable by a court or through a final CFTC order. The reported settlement talks and prosecutors’ decision not to pursue a criminal case make careful language necessary while the investigation remains unresolved.

Kalshi Had Already Seen Similar Conduct

The risk exposed by the Kalshi insider trading case was not new to the company or its regulator. In February, the CFTC disclosed two earlier cases involving improper activity on Kalshi. One involved a political candidate who traded on his own candidacy despite having direct influence over the contract’s outcome.

Kalshi required the candidate to surrender $246.36 in profits, imposed an additional $2,000 penalty and suspended him from the exchange for five years. The CFTC said the conduct potentially violated federal prohibitions against fraudulent or manipulative schemes.

The second case involved an editor affiliated with a YouTube channel. USA Herald previously reported that Kalshi suspended and fined a MrBeast editor after determining that he likely used confidential information from his job to trade on markets tied to unreleased content.

The exchange imposed more than $20,000 in disgorgement and penalties and suspended the editor for two years. The CFTC said that fact pattern potentially involved insider trading based on misappropriated confidential information.

The exchange imposed more than $20,000 in disgorgement and penalties and suspended the editor for two years. The CFTC said that fact pattern potentially involved insider trading based on misappropriated confidential information.

Those cases identified the same vulnerability now at the center of the Perez investigation. Prediction markets can create contracts about events controlled by politicians, content creators, employees and production staff who know more than the people trading against them.

Surveillance Worked After the Trades Occurred

Kalshi deserves credit for detecting the suspicious activity and referring it to regulators. An exchange that ignores warning signs would present a much larger threat to market integrity.

Detection is only one part of the Kalshi insider trading problem, however. Perez allegedly traded on more than a dozen speeches over approximately three months and accumulated more than $100,000 before the matter reached its current stage.

Kalshi says its rules prohibit trading based on material nonpublic information obtained through employment. In June, the company announced that it would collect employment information before allowing users to trade in markets with heightened insider or manipulation risks.

The update also included a whistleblower portal, enhanced trader-risk scoring and additional screening intended to identify presumptive insiders before they place trades.

Those measures may help the exchange identify conflicts before suspicious profits accumulate. They also raise questions about why employment information was not collected earlier for markets built around political speeches, corporate announcements, media content and other events with obvious insider access.

A surveillance program can flag unusual results after money changes hands. A stronger market-integrity system should also prevent known insiders from entering contracts tied directly to their work.

Mention Markets Create an Obvious Conflict

Some prediction contracts involve events that no individual trader can control. A user wagering on the national unemployment rate or the path of a hurricane may have a sophisticated model, but the person does not determine the official number or steer the storm.

Mention markets operate differently. The people writing, editing, producing and delivering the speech can directly affect the outcome.

A staff member may know that a word appears in the final draft. Someone closer to the speaker may know the president intends to abandon that section, while a producer may know whether time limits will cut certain remarks.

The line between information and influence can become even less clear during live events. If an insider changes, removes or emphasizes language while holding a financial position tied to that language, the conduct could move beyond trading on confidential information toward manipulating the event itself.

There is no public allegation that Perez altered Trump’s speeches to benefit his trades. The investigation, as reported, centers on his alleged use of advance knowledge and his decision to exit positions when Trump departed from the script.

The market design still created the opportunity for alleged Kalshi insider trading. Kalshi accepted public money on outcomes known in advance by a small group of government employees and contractors without apparently blocking those insiders before trading began.

Political Connections Raise the Need for Transparency

The Kalshi insider trading allegations also arrive while the company maintains visible ties to the Trump family. Donald Trump Jr. joined Kalshi as a strategic adviser in January 2025 and has promoted prediction markets as a faster and more accurate alternative to traditional polling and news coverage.

Kalshi said Trump Jr. would help refine strategy, develop partnerships and expand the platform’s public reach. The company also highlighted the Trump campaign’s use of Kalshi to track the 2024 presidential election.

There is no evidence that Trump Jr. knew about Perez’s trades, benefited from them or played any role in the matter. His advisory position does not make Kalshi responsible for the alleged conduct of an individual White House employee.

The relationship does increase the need for visible and independent enforcement. A platform with close political connections cannot afford any appearance that government insiders receive different treatment or that embarrassing investigations will be handled quietly.

Kalshi’s referral to the CFTC supports its claim that the exchange took the activity seriously. A final enforcement outcome should make clear when the trades were detected, which rules allegedly were violated and what safeguards will prevent similar conduct.

White House Ethics Rules Came After the Trades Began

USA Herald previously covered the White House warning against prediction-market bets based on nonpublic information. The March 24 directive reminded employees that federal ethics rules prohibit using confidential government information for personal financial gain.

That warning came after investigators believe Perez had already traded on multiple speeches. The timing raises questions about whether existing ethics rules were communicated clearly before political prediction markets became a recurring source of concern.

White House Press Secretary Karoline Leavitt said Trump considered the alleged conduct a “disgrace” and personally decided to place Perez on unpaid leave. A White House spokesperson also said employees are expected to follow strict ethics requirements.

The episode demonstrates why general ethics rules may not be enough for an administration whose official actions, speeches and personnel decisions appear regularly on prediction platforms. Employees need explicit restrictions addressing event contracts, disclosure requirements and the use of government information.

That guidance should cover more than the person operating a teleprompter. Speechwriters, communications aides, schedulers, national security staff, advance teams and other employees may have access to information capable of resolving political markets before the public receives it.

The same concern applies throughout government. Congressional employees may know when legislation will advance, agency staff may have access to regulatory announcements and military personnel may know about operations before those events become public.

Political Markets Need Real Insider Barriers

Prediction markets promote themselves as tools that convert collective knowledge into useful probabilities. That promise depends on confidence that the market price reflects public judgment rather than secret access.

Kalshi says it blocks traders who possess material nonpublic information obtained through their employment, but employment disclosures alone may not prevent insiders from entering contracts tied directly to their work. Government employees should not be allowed to trade on speeches, appointments, legislation, enforcement decisions or operations they prepare, influence or learn about through official duties.

Exchanges should also identify businesses, agencies and campaigns connected to sensitive contracts before trading begins. Accounts linked to those organizations could then face additional review, lower limits or complete exclusion from certain markets.

Clear Kalshi insider trading rules would protect ordinary traders and the prediction markets themselves. Without them, participants cannot know whether they are competing against another forecast or financing a payout to someone who saw the script first.

A Prediction Is Not a Prediction When You Know

Perez may ultimately surrender the reported profits without facing criminal prosecution. Regulators may also determine that additional penalties or restrictions are appropriate after reviewing his access, duties and trading history.

Whatever the final outcome, the Kalshi insider trading case has already exposed a weakness larger than one White House employee. Prediction markets increasingly invite the public to place money on political events created by people with privileged access to the outcome.

Kalshi says its markets can provide a transparent, real-time measure of what is likely to happen. That claim becomes difficult to defend when insiders can trade against the public on words already loaded into a teleprompter.

Markets can reward informed predictions. They should not reward someone for knowing the answer before everyone else gets the question.