Virginia Senate candidate Mark Robert Moran has filed a lawsuit against KalshiEX and parent Kalshi Inc., alleging the prediction market operator acted in bad faith when disciplining him for trading contracts linked to his own political candidacy.
The complaint, filed in the US District Court for the Eastern District of Virginia, challenges a $6,229.30 financial penalty, disgorgement of trading profits and a five-year suspension imposed by Kalshi.
Moran does not dispute that Kalshi's rules prohibited his trading. Instead, he alleges the exchange failed to follow its own disciplinary procedures when determining the sanction and publicly describing the settlement process.
Kalshi's disciplinary notice states that Moran placed 10 orders in a market asking who would run for public office before later placing two trades in a Virginia Democratic Senate nominee market.
Kalshi determined that he had direct influence over the underlying events and violated Rule 5.17(z).
Moran alleges Kalshi initially proposed an $800.15 penalty and one-year suspension alongside a no-admit, no-deny settlement and public acknowledgement. According to the complaint, Moran accepted all terms except the public acknowledgement before Kalshi subsequently imposed the larger penalty and five-year suspension.
The lawsuit points to other candidate cases as potential comparators. Matt Klein and Ezekiel Enriquez each purchased less than $100 of contracts linked to their candidacies and settled with Kalshi.
Both received five-year suspensions, while Klein was fined $539.85 and Enriquez $784.20.
More recent enforcement has produced different sanctions. North Carolina congressional candidate Laurie Buckhout received a three-year suspension and $2,589.96 penalty after purchasing less than $1,000 in contracts concerning her candidacy.
The dispute comes as prediction-market integrity receives greater regulatory attention. The CFTC issued an enforcement advisory in February after cases involving misuse of non-public information and candidate trading on Kalshi.
In July, former congressman George Santos agreed to disgorge $17,570 and pay a $17,500 CFTC penalty over trading and alleged manipulative activity involving a Kalshi contract whose outcome he could influence.
Moran is seeking damages, declaratory relief and an order requiring Kalshi to remove its statement that he repeatedly refused settlement and stopped responding.
In related legal developments, Kalshi was denied an emergency injunction by the 10th Circuit US Court of Appeals this month, allowing Utah regulators to enforce state anti-gambling laws while litigation over sports event contracts continues.
Kalshi's Rule 5.17(z) prohibits traders with direct or indirect influence over an underlying event from trading contracts connected to that event
