Trump Press Secretary Prediction Market Under Investigation After Zacharia Appointed

Alleged mysterious trades in the prediction market to become Donald Trump’s next press secretary are under investigation, according to reports. Following Katie Zacharia’s surprise selection on Friday, Kalshi is probing several unusual winning bets.

According to reports, three small trades were made on who would be named Trump’s next press secretary following the departure of Karoline Leavitt.

Trades were kept small, certainly smaller than the sorts of numbers seen in previous cases of insider trading. For now, the "suspicious bets" are just that and are no indication of inside dealing.

Despite the relatively small bets, the potential profits ran into the thousands of dollars.

For most of the time the market was open, event contracts in rank outsider Zacharia were trading for $0.01. With each contract resolving at $1.00, that meant a $0.99 profit for every share purchased.

Despite multiple reports over the weekend of a Kalshi investigation, first reported in the Wall Street Journal, the world’s largest prediction market exchange is keeping quiet. For now.

The $0.01 Outsider

Katie Zacharia barely registered on the list of prediction market hopefuls to succeed Leavitt in the White House post.

Experienced news anchors, including Scott Jennings and Maria Bartiromo were the traders’ picks, as well as current deputy press secretary, Anna Kelly. Even close Trump aide, Natalie Harp, was in the running as a $0.05 long shot.

However, it was a complete unknown who was announced to help get the Trump administration’s message across from now on.

Katie Zacharia Bets: What We Know

• Several ‘Yes’ trades on Katie Zacharia becoming U.S. press secretary
• Bets were small, all allegedly under $100
• However, one trade was worth $19, netting the anonymous trader thousands
• Zacharia is a right-wing political commentator and attorney. She already works for Trump Media & Technology Group and was formerly at the Department of Homeland Security

Kalshi’s Problem with ‘Knowable Markets’

There is no indication or proof that anyone in the White House made trades on Kalshi with prior knowledge of Zacharia’s appointment.

However, the surprise announcement highlights prediction exchanges’ battle with “knowable markets”.

So-called knowables are markets where the outcome is known in advance. The scope for alleged insider trading is therefore wider.

Kalshi already claimed one scalp this year by handing a life ban to ex-Congressman George Santos.

A Kalshi first came after finding Santos guilty of buying contracts in his own appearance at the State of the Union address in February.

Kalshi’s compliance team alleged that Santos had artificially deflated his probability of showing up before buying contracts in just that outcome. Santos won almost $18,000 on event contracts before Kalshi moved in.

Alleged Insider Dealing Nothing New

Similar cases of insider dealing on knowable markets have been larger, however.

In August, a former White House teleprompter operator was ordered to pay over $172,000 for betting on a Donald Trump speech.

Gabriel Perez was found to have used knowledge of a Trump speech to bet on “mention markets”. These offer contracts on certain words or phrases used by a public speaker.

However, the largest single case of proven insider dealing came in April. U.S. solider Gannon Ken Van Dyke was charged with using classified information relating to the capture of Venezuelan president Nicolas Maduro. Van Dyke was apprehended after it was discovered he made over $400,000 in profit on Kalshi.

House Committee Examines Insider Dealing

The latest headline grabber couldn’t have come at a worse time for Kalshi as it battles legal cases and investigations.

Earlier this month, the House Committee on Oversight and Government Reform expanded its probe into alleged insider trading.

Committee chair James Comer has sent letters to several exchanges to request more information on how insiders can gain an advantage in certain markets. Comer said he is also requesting information on how platforms verify customer IDs.

At present, it’s not known whether any investigation would reveal the identity of the lucky traders who correctly predicted Katie Zacharia’s appointment.