It was a tight race, so a campaign staffer doubted the results of an unreleased poll showing their candidate up — by a lot.

The tip about the outside poll didn't match up with the campaign's internal numbers. But accuracy aside, the staffer knew the poll would shake up the prediction markets. One market had their candidate down by double digits.

"Myself and others started placing bets before that poll came out," the staffer, who was working on a statewide campaign in the South, told NPR on the condition of anonymity over fear for their future employment. "And then, sure enough as soon as that poll came out, the stock went up and everybody made money."

This is one of the first publicly reported instances of a campaign staffer betting and winning thousands on their own candidate on prediction markets — emerging financial exchanges where billions are bet each week on future events like sports, culture and even elections.

The staffer's bet was verified by prediction market data reviewed by NPR.

"Because you have all this information and knowledge that isn't publicly available yet, it's almost foolish not to bet on it before it's made public," the staffer said.

The staffer said campaign bets by fellow staffers were commonplace in this particular campaign and the ones that followed.

In recent weeks, popular prediction market Kalshi has banned and fined a handful of political candidates for betting on themselves. Bets like these raise questions about how campaign operatives can also turn private information into a quick payday amid an unsettled legal landscape.

From private information to payday

For this campaign staffer, the method was simple. First, they'd receive a tip on an unreleased poll and compare it with the odds on a prediction market, like PredictIt or Polymarket. If the poll reported their candidate had a better chance of winning than the prediction markets, they'd use this edge to buy low-cost odds on their candidate — known as event contracts — before the poll was released.

On prediction markets, the price of an event contract often mirrors the market's estimation of the probability of a given outcome — in this case the chance a candidate will win. So a contract selling for 20 cents means the market is pricing a 20% chance of success.

Once the poll went public, the prediction market contracts shot up in value. The staffer would then sell their contracts at a higher price and make money.

"The most I've ever made is thousands," the staffer said.

This sort of election betting "could potentially be a violation" and be subject to a CFTC investigation, said Jeff Le Riche, who worked at the Commodity Futures Trading Commission for 20 years as a trial lawyer focused on insider trading and market manipulation. The agency oversees and regulates prediction markets and allows election betting in some, but not all, cases.

"It's illegal or a violation of the Commodity Exchange Act if you have material, non-public information and you have a duty not to use that," Le Riche said.

Le Riche said this sort of election betting by a campaign staffer potentially checks the boxes needed for a CFTC insider trading investigation: a breach of a duty to confidentiality, use of non-public material in a bet, and an understanding that the poll was insider information.

"There's probably a pretty good argument that they're using information that they're not supposed to use for their benefit," Le Riche said.

He said the key documents of the investigation would be the campaign staffer's employment agreement and the prediction market user agreement. Any breach of these documents could be grounds for possible investigation and prosecution.

"Illusion of safety"

While there aren't clear examples of the CFTC investigating and prosecuting political insider trading, Le Riche said he expects to see more enforcement as prediction markets become more popular and regulated.

"This happens a lot in financial innovation, where something goes from a purely unregulated space, kind of a Wild West approach," Le Riche said. "And so you haven't seen many people get in trouble or prosecuted or investigated for activity, and so it creates an illusion of safety."

Another campaign staffer who worked on statewide races on the East Coast, who also spoke on the condition of anonymity for fear of legal liability, said they saw colleagues betting on the outcome of the race they were involved in.

"They were placing bets because they had polling and the markets were so topsy turvy," the East Coast staffer said of their colleagues. "They were like, 'I'm going to go make a quick $5,000.'"

This second staffer said they personally don't "gamble" or use prediction markets, but that this sort of campaign betting was common — especially when election prediction markets were newer in the early 2020s. Back then, the odds were easier to beat when fewer people were participating, this staffer argued.

"People certainly were doing that," they said. "I know many people who did it."

They said their fellow staffers felt free to bet on their own candidates because there were so few rules and regulations on these new markets.

"Unless the federal government makes a change … it's kind of going to continue to be the Wild West, in all honesty," the staffer said.

An ill-prepared regulator

The CFTC regulates prediction markets and former CFTC commissioner Kristin Johnson said the commission is not fit to investigate or enforce election-related insider trading cases.

"I don't believe that the CFTC has developed experience and expertise in policing election positions," Johnson said. "The commission has not yet tried a series of cases testing the authority, and the courts have not indisputably concluded that insider trading laws apply in one of those contexts, or at least one that's relevant to the hypothetical you offered."

More broadly, Johnson questioned the staffing levels of CFTC's enforcement division and the commission's "ability to execute on its mandate" to protect against fraud and market manipulation.

"It will be important for Congress to lead and give the CFTC a clear direction of travel regarding the expectations with respect to the kinds of contracts we're describing … political event contracts," Johnson said.

In recent weeks, the White House warned staff against using prediction markets, and the Senate unanimously voted to prohibit senators and their staff from trading on these new markets.

Sen. Todd Young, R-Ind., called the Senate rule change a "good first step" and said Congress should go further — prohibiting "all federally elected officials and government employees from using insider information to bet on a prediction market contract." Neither the Senate rule change nor the proposed legislation would prohibit campaign staffers from placing election bets on prediction markets.

In March, Rep. Seth Moulton, D-Mass., banned prediction markets from his House office and campaign.

"When people are in positions of public trust and they use insider information to make, you know, insider bets, that's completely unethical," Moulton's campaign manager, Jeff Phaneuf, said. "And so, we banned it in our campaign and we're encouraging other offices, other campaigns to do the exact same thing."

Phaneuf said the campaign staff held a meeting and verbally agreed to the ban. He then added the prediction market ban to the campaign employee handbook.

Election betting has been legal for years, despite insider-trading concerns from lawmakers and regulators. CFTC first allowed a limited number of election bets in 2014 on PredictIt, a nonprofit research-based organization. But recently, for-profit prediction markets like Kalshi have jumped into the game, advertising and popularizing election betting. Kalshi now hosts billions of dollars in legal elections and political bets. Another prediction market platform, Polymarket, also hosts election bets, but this market largely operates offshore and outside of U.S. regulation and laws.

There have been a handful of bipartisan bills recently introduced seeking to ban or limit political and war betting by insiders, but none have come close to becoming law. Meanwhile, government ethics rules have been slow to keep up to date with the emergence of prediction markets, creating a transparency blind spot at the highest levels of the government.

The lack of regulation and unsettled law surrounding prediction markets have raised serious concern on Capitol Hill. In April, the House Agriculture Committee — which oversees the CFTC — questioned the commission's sole board member, Michael Selig, who has cleared the regulatory pathway for prediction markets and defended them from state lawsuits.

"Nothing is more important than protecting market integrity," Selig said at the hearing.

Still, Selig has been a big booster of the nascent industry. He is leading lawsuits against states suing prediction markets for violating local laws.

In February, the CFTC issued guidance to prediction market firms. The six-page advisory asserted the CFTC's control of prediction market regulation over that of states that have sued these markets over sports betting regulation. The notice also restated that the prediction markets themselves have an "obligation to list only contracts that are not readily susceptible to manipulation."

That same month, Kalshi revealed insider trading cases against an editor for MrBeast, a top YouTube creator, and a candidate in the California governor's race who, in an apparent publicity stunt, told supporters that he had bet on himself to win and encouraged others to do the same. And in April, Kalshi suspended and fined three users for "political insider trading" after an internal probe found that candidates bet on their own campaigns.

Meanwhile, reports of possible insider prediction market trades continue. In April, NPR analyzed data showing a Polymarket trader made around $300,000 correctly betting on President Biden's last-minute pardons. In March, NPR reported that a Polymarket trader bet $553,000 about Iran and its Supreme Leader, Ayatollah Ali Khamenei, just before an Israeli strike killed him.

As for the campaign staffer who bet on their own candidate, they sold their position soon after the poll was released and their shares went up. They then saw internal polling that convinced them their candidate would win, and bet again.

"I basically took the money that I won and just reinvested it to win more money," the staffer said.

Want to share more about prediction markets and campaigns? You can reach Luke Garrett via encrypted Signal chat at lukegarrett.60