Kalshi, Polymarket Trading Volumes Raise Questions Amid Massive Growth

Some observers are asking whether trading volumes on prediction market platforms Kalshi and Polymarket are inflated, after spotting unusual patterns at both companies. Both platforms allow users to wager on the outcome of events, from elections to sports, and each has posted trading numbers that raise questions about whether they are real.

Kalshi’s Dollar Volume Clusters

A user on Kalshi flagged an unusual pattern on the platform’s perpetual futures market for ether. The trades in question were roughly $5,500, and they made up a large share of transactions. That 24-hour trading volume stood out as abnormally high when set against actual resting liquidity. CNBC’s investigation confirmed the observation: on Sept. 20, nearly half of the dollar volume traded on Kalshi’s ether perpetuals came from trades sized between $5,495 and $5,505.

The clustering suggests a small number of traders making identical-sized bets repeatedly. Experts CNBC spoke to said the ratio between daily volumes and actual sitting liquidity is worrying and represents an inefficient market structure that creates inorganic activity. Jack Such, a spokesperson for Kalshi, said the company has “zero concerns” about that ratio.

Last week Kalshi said it has no wash trading on its platform, pointing to tracking of hundreds of users tied to the flagged trades first raised on social media. Still, the experts CNBC spoke with say they don’t buy that claim. The market’s design means the volume numbers might show more interest from retail traders than actually exists.

“To the extent that a material share of reported perpetual volume is manufactured… headline volume and its trajectory may overstate the underlying trading demand on which such a valuation would rest.”

Polymarket’s Low-OdDS Bias

The exchange run by Polymarket sits outside the oversight of U.S. regulators, and observers have noted something unusual about it. Markets that include several contracts tend to draw more trading volume on the ones with lower odds of coming true than on those with higher chances. This pattern can be seen across markets tied to elections, sports and central bank decisions.

One example comes from the 2026 FIFA World Cup. Spain, the eventual winner, had $152 million traded on contracts related to its odds to win the soccer tournament. Spain’s total was less than the $158 million traded on Egypt’s odds, which never crossed 0.5%. Morocco’s contract, which never had a greater than 2% chance of winning, drew a similar amount.

One notable example involves a wager on who will become the next Prime Minister of Ethiopia. The sitting leader, Prime Minister Abiy Ahmed, holds 98% odds on the contract and has seen roughly $170,000 worth of trading placed on his chances. In contrast, Gedion Timothewos has maintained odds that sit beneath 3%, yet still commands nearly $56 million in traded volume.

What the Companies Say

Kalshi and Polymarket both say that no wash trading happens on any of their products, and they also say that the respective patterns do not show inorganic activity.

Kyle Gesuelli, Polymarket’s head of revenue and analytics, told CNBC that the popularity of its low-odds contracts isn’t from wash trading or inorganic activity. He said it’s driven by highly active traders, referred to as “sharps,” discovering mispricing in various contracts.

“It’s actually healthy for markets because it brings pricing imbalances back into balance,” Gesuelli said.

The CFTC Investigation

Kalshi’s ether perpetual future contract, according to a report by The Wall Street Journal. CNBC could not independently verify the report. A spokesperson for the CFTC said that the agency doesn’t is under examination by the Commodity Futures Trading Commission, which is looking into the platform’s trades while also confirming or denying matters related to investigations.

CFTC Chairman Michael Selig addressed the issue on CNBC’s “Squawk on the Street” last Wednesday, saying the agency takes a hard line on manipulation.

“We have a zero tolerance policy when it comes to any sort of manipulative trading, including wash trading, insider trading, or fraud in our markets,” Selig said. “When you have new types of markets evolving, you’re going to see fraud with that.”

The Valuation Question

Trading volume has become a measure both companies rely on to show how much interest there is in their exchanges, which helps explain why their valuations have grown so high. Polymarket’s U.S. exchange launched in May, and the company is now raising money at a valuation north of $20 billion in the private market. Kalshi, meanwhile, is reportedly negotiating a funding round that would value it at $40 billion, following the launch of its perpetual futures product in June.

The accuracy of these volume figures is under scrutiny now, because the companies are reportedly exploring moves to the public markets as soon as next year.

A finance professor at Ulm University in Germany named Andre Guettler wrote in a working paper that the difference is most important for retail investors, who would naturally be the buyers of a prediction-market exchange at a public listing.

There is still no answer to whether these platforms are merely well-liked, or if their user counts are being built up through artificial means.

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Source material: “Kalshi, Polymarket trading volumes on some products raises questions amid massive growth,” CNBC.

Kalshi · Polymarket · prediction markets · trading volume · valuation · wash trading