Kalshi Crypto Volume Allegations Emerge Against Backdrop of $7.64 Billion Prediction Market Record

Prediction markets recorded $7.64 billion in notional volume across tracked exchanges on Sept. 19-20. The total rose 20% from $6.34 billion the prior weekend, with Kalshi reporting $5.83 billion and Polymarket U.S. just over $1.03 billion. Parlays accounted for $4.49 billion, or 58.8% of activity. These figures arrived alongside fresh questions over how certain volumes are generated.

Kalshi Faces Allegations of Inflated Crypto Volume

Beni, co-founder of Stealth Neolab, highlighted $539 million in 24-hour Ethereum perpetual trading volume against $3.1 million in open interest on Kalshi. That produced a ratio of roughly 174 times. Beni also noted a recurring trade size of about $5,500 that represented 48% to 58% of ETH perpetual volume across four days. Beni wrote, “Kalshi fakes their crypto volume and I can prove it.”

The analyst referenced a CFTC-filed incentive program from Kalshi that offers reduced fees and rebates. The program excludes suspected self-matching, wash trading and abusive practices. Kalshi crypto lead IcoBeast disputed the claims. One chart cited measured prediction-market activity rather than perpetual-futures volume. IcoBeast rejected any suggestion that Kalshi selects Self-Clearing Members.

TickerTracker separately reviewed 221 million trades across 4,562 Kalshi markets. In the contract on whether Zohran Mamdani becomes the 2028 Democratic nominee, an automated system buying at 0.2 cents and selling at 0.1 cents drove 67% of September volume through Sept. 20. Public data alone could not confirm wash trading.

Regulatory and Market Context

Missouri Attorney General Catherine Hanaway issued cease-and-desist letters to six operators: Kalshi, Polymarket, Crypto.com, Novig, Underdog and Robinhood. Hanaway contends the products amount to unlicensed sports wagering under state law and require Missouri Gaming Commission approval. The action follows her prior statements that settlements remained possible.

The Senate Banking Committee scheduled a Republican-only roundtable on securities-based prediction markets this week. Kalshi representatives are set to participate. In Europe, Polymarket is seeking treatment as a financial product under MiFID rather than gambling, though ESMA described the sector as “rife with insider trading.”

As reported by Gambling Insider, the volume surge and accompanying disputes arrive as legal fights over prediction markets span more than two dozen states.

The Credibility Test Ahead

Disproportionate volume-to-open-interest ratios and recurring micro-trades invite legitimate questions about reported liquidity. With Missouri enforcement underway and federal committees engaged, platforms face pressure to demonstrate that incentive structures and trade patterns reflect genuine participation. Sustained growth will depend on verifiable data that satisfies both participants and regulators without reliance on notional face-value mechanics alone.

Reporting: Gambling Insider

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