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Puerto Rican reggaeton star Bad Bunny will headline the 2026 Super Bowl halftime show, and some bettors made bank piling their money in on him in the week before the announcement. Prices for Yes shares on Bad Bunny to headline had floated in the single digits for most of September before spiking to nearly 20 cents (a 20% chance) in the span of a few hours on September 23.
The suddenness of the swing sparked speculation of insider trading in the lead-up to the September 28 reveal that the pick was, in fact, Bad Bunny.
Official prediction: Bad Bunny will be announced as the headliner for the Super Bowl halftime show later today. This is based on what appears to be insider trading on both platforms lined up with the timing of past announcements.
— Gaeten Dugas (@GaetenD) September 28, 2025
The scenario is reminiscent of last month’s fiasco in which a presumed insider bet heavily on Taylor Swift’s wedding announcement before it became public. The bets were placed by a newly created account named “romanticpaul,” which some suspected to be Swift’s guitarist, Paul Sidoti.
Because of the breadth of prediction market contracts, insider trading is likely to be a persistent and thorny issue. Even when it comes to conventional stock trading, insider trading is notoriously difficult to litigate and prosecute. For instance, sharing non-public financial reports with someone who proceeds to buy shares based on what they read in them would be clear-cut. Yet most cases, in practice, involve vague hints and rumors, making it difficult to prove that any specific information was leaked or what motivated a given transaction.
Outside the confines of corporations with well-defined “inside information,” it’s trickier still. For instance, the 2012 STOCK Act sought to crack down on insider trading by members of Congress. Yet, over a decade later, there has not been a single prosecution under those laws, despite the suspicion that such profiteering is rampant.
Is Insider Trading on Kalshi Illegal?
In principle, Kalshi has an obligation, mandated by the CFTC, to police its markets and ensure that no “unfair trading practices” are taking place. The problem, of course, is that it has countless contracts on offer, spanning just about every proposition imaginable. Many of these markets have only a few thousand dollars in liquidity, making it impractical to put them all individually under a microscope.
Nonetheless, it is officially against Kalshi’s terms to make trades on “material, nonpublic information,” the same way it would be in stock trading. Rule 2.11 prohibits Kalshi employees and board members from disclosing information about its markets to outsiders. Meanwhile, Rule 5.13(s) addresses trading on such information by users:
If a Member is an Insider that has access to material non-public information that is the subject of an Underlying of any Contract or that has the ability to exert any influence on the subject of an Underlying of any Contract, that Member is prohibited from attempting to enter into any trade or entering into any trade, either directly or indirectly, on the market in such Contracts.
That explicitly includes anyone working for a media outlet being used as the source to resolve a contract.
If it finds users in violation of these rules, it could seize funds from their accounts or ban them from the platform. This would be much like an online poker site banning suspected cheaters and confiscating their funds.
In principle, insider trading in stocks or on a prediction market could lead to civil or criminal fraud charges. However, even when it comes to multi-billion-dollar corporate mergers, such prosecutions are relatively infrequent. If a celebrity’s acquaintance happens to make a few grand after overhearing something in conversation… realistically, it’s probably unlikely that we’re going to see anyone getting the book thrown at them, unless the problem becomes so frequent and brazen as to force the issue.
Perception Matters as Much as Reality
Not every sudden, unexplained swing in market prices necessarily indicates insider trading. Most financial products are subject to random volatility, especially those with low liquidity,
We may be focusing on Bad Bunny because that shift happened to foretell the actual result. Yet it was the third in a series of sharp swings, and neither of the first two produced any profits for those who’d caused them.
In early September, Adele was given about a 4% chance, the same as Bad Bunny. On September 16, her shares spiked to 16 cents (16%). A second surge on September 19 propelled her to become the frontrunner at around 40%, overtaking Taylor Swift, who had been the favorite since teasing a new album in August.
Another swing on September 21 saw Swift back on top at 53%, with Adele crashing to 25%.
Given all those sudden moves, suspicions might have been raised regardless of the eventual winner.
In terms of impact on the markets, however, it almost doesn’t matter if there’s actual insider trading happening. Whether or not Kalshi or Polymarket cracks down, the prevailing belief among traders will always be that someone knows something they don’t. That will lead to speculators chasing trends they assume to be insider trading, creating spikes in volatility close to an important deadline or likely announcement date.
Those wanting to protect themselves from such swings can take their positions early with the intent of holding until resolution. The only victims of insider trading are those making a transaction with the insider. That will typically be those with Limit orders pending on the exchange at the point the insider chooses to act. For those who locked in their position early, last-minute price swings are immaterial. (This is an opinion, not financial advice.)
Bad Bunny image credit: Toglenn via Wikimedia Commons (license)
