Key Points:
- Students at University of Miami allegedly used information from Jeff Bezos’ stepson to profit from Super Bowl attendance bets
- False rumors about Mark Wahlberg attending the Super Bowl generated over $24 million in trading volume on prediction markets
- Kalshi is investigating both the Bezos and Wahlberg markets for possible insider trading violations
- Recent cases include $1.2 million in profits from Iran military strike bets and $400,000 from Venezuela regime change wagers
- U.S. Senators have introduced legislation to prevent federal officials from trading on prediction markets
Prediction market platforms Kalshi and Polymarket are investigating possible insider trading after college students allegedly used private information to profit from Super Bowl wagers. The case centers on bets about whether celebrities like Jeff Bezos and Mark Wahlberg would attend the game.
According to a Wall Street Journal report, students at the University of Miami’s Sigma Alpha Epsilon fraternity began betting that Amazon founder Jeff Bezos would not attend the Super Bowl. Evan Whitesell, Bezos’ stepson, is a member of the fraternity.
As information spread through group chats and alumni networks, more traders bought contracts predicting Bezos would not appear. The probability of his attendance on Kalshi dropped from around 70% to roughly 30%.
Two people who placed bets said Whitesell was the source of the information. However, neither said they heard it directly from him.
False Rumors About Mark Wahlberg Generated Millions in Trading
A separate market on actor Mark Wahlberg’s attendance generated more than $24 million in trading volume based on false rumors. The rumors circulated in group chats and on social media, but Wahlberg did not attend the game.
The rumor started at Clemson University fraternities, where Wahlberg’s daughter Ella is a student. The Wall Street Journal cited a member of the Clemson chapter of Delta Chi who claimed Ella confirmed the information in text messages.
She allegedly told people the bet was “literally free money.” Students who bet based on this false information lost money when Wahlberg did not show up.
Kalshi told the Wall Street Journal it is investigating the Bezos and Wahlberg markets for possible insider trading. The company has not publicly released findings from these investigations.
Recent Cases Raise Questions About Platform Oversight
The Super Bowl incidents add to growing concerns about insider trading on prediction markets. Less than a week ago, several accounts reportedly made around $1.2 million in profits on Polymarket after betting on U.S. military action against Iran.
Most of those trades were placed hours before the strikes occurred. In January, a trader reportedly earned over $400,000 on Polymarket after placing multiple bets that Venezuelan leader Nicolás Maduro would be removed from power.
The trader placed the bets shortly before reports emerged of an operation targeting the Venezuelan leader. Polymarket has not publicly commented on these cases.
In late February, Kalshi announced it had closed two insider trading cases. That was the first time any major prediction market platform publicly disclosed investigations into insider trading.
The Coalition for Prediction Markets, which includes Kalshi but not Polymarket, took out a full-page ad in the Washington Post in January. The ad countered accusations that the platforms encourage insider trading.
U.S. Senators Jeff Merkley and Amy Klobuchar recently launched a legislative effort to prevent federal officials from trading in prediction markets. The proposal aims to stop government officials from using sensitive or non-public information to profit from event-based trading.
Senator Chris Murphy posted on X on February 28 that he is also working on a similar proposal. Multiple states have also introduced legislation to limit prediction markets.
In January, NCAA President Charlie Baker sent a letter to Commodity Futures Trading Commission Chair Mike Selig. He urged the agency to prevent prediction markets from offering markets on collegiate sporting events until it can implement a more robust regulatory framework.
Prediction markets operate under federal derivatives rules rather than state gambling regulations. Some policymakers describe this as a regulatory gray area that makes enforcement challenging.
