The 2000s ImClone scandal centred on Sam Waksal dumping shares after FDA rejected its cancer drug. Martha Stewart was drawn in via their shared broker; both went to prison. This history fuels worry about Kalshi's plan to accept bets on FDA approvals and clinical trial results.

Kalshi requires employer disclosure, bars drugmaker insiders, and starts betting after enrollment closes. Enforcement director Robert De Nault says surveillance can zero in on the small group who would know material information. Kalshi froze the account of Donald Trump's teleprompter operator for allegedly using insider speech knowledge.

This contrasts with Washington, where Congress members trade affected stocks and Polymarket accounts made $600,000 on the Iran attack and April ceasefire. Trump Media & Technology Group plans to charge $100,000 monthly for faster Truth Social access, touting posts that moved markets. CFTC enforcement fell from 58 to 13 cases; SEC insider trading cases dropped from 54 to 48 as total actions fell 22% to 456.

Only two people prosecuted for prediction market abuses: a soldier (Venezuela operation) and a Google engineer. Trump's teleprompter operator not charged. Without government prosecution threat, unscrupulous actors will exploit expanding prediction markets.