Kalshi’s biotech prediction markets draw criticism while trading stays light

Kalshi launched prediction markets tied to clinical-trial outcomes and Food and Drug Administration decisions in July, and those contracts have attracted scrutiny from lawmakers and medical researchers despite limited trading activity. Democratic Sens. Angela Alsobrooks of Maryland and Ron Wyden of Oregon sent a letter on Wednesday, Nov. 11, 2026, to Health and Human Services secretary Robert F. Kennedy Jr., questioning safeguards against risks to patients and insider trading. A separate commentary in JAMA on Oct. 29 and a Public Citizen piece on Nov. 2 also called for bans or tighter controls.

Lawmakers and patient-safety concerns

The Nov. 11 letter from Sens. Angela Alsobrooks and Ron Wyden flagged potential harms from financially incentivised markets tied to trial results and drug approvals. The senators wrote that “Allowing individuals to bet on the success of these trials and drugs undermines the scientific process, creates perverse incentives for researchers, harms trial participants, and could lead to dangerous medical outcomes for untold numbers of Americans,” according to CNBC, which first obtained the letter.

Public Citizen amplified those concerns. Robert Steinbrook, director of Public Citizen’s Health Research Group, wrote that “Clinical research is based on public trust and should advance medical knowledge and public health,” and argued clinical research is not for financial speculation. He called on the Commodity Futures Trading Commission (CFTC) to intervene, writing that “Although bets on clinical trial results and drug approvals are legal, they shouldn’t be,” and that the CFTC should either prohibit these bets or create a regulatory framework forbidding trading by anyone with nonpublic information.

Researchers warn markets could affect trial conduct

A commentary published in the Journal of the American Medical Association on Oct. 29, co-authored by former FDA commissioner Robert Califf, criticised Kalshi’s timing rules. The authors noted Kalshi bars the listing of trial-outcome contracts before enrollment closes but said that does not prevent trading while a trial is still underway. They used the Phase 3 Alzheimer’s trial POLARIS-AD as an example, noting that such trials “depend on months of follow-up data collection after the last participant enrolls.” The commentary stated: “For trials like POLARIS-AD, which depend on months of follow-up data collection after the last participant enrolls, the exact period during which Kalshi prices a public, financially incentivized probability is the period during which that outcome is still being generated.”

The JAMA authors warned that publicly displayed probabilities could influence participant behaviour. They wrote that “Low public odds of success could discourage continued participation in trials that already carries high participant burden, increasing dropout and reducing statistical power,” and that “High public odds could have the opposite effect: participants who do not perceive the benefit predicted by optimistic markets may conclude they are in the placebo group and discontinue follow-up.”

Researchers also flagged a risk of direct interference. The commentary said: “A trader who buys a Kalshi contract that pays out if a trial fails has a direct financial incentive not only to predict a bad outcome, but to help bring one about.” The authors questioned whether Kalshi’s employment verification would catch family members, outside researchers, contractors and trial participants with sensitive information, and whether patients should be informed about markets tied to their trials or sponsors should monitor market effects. The commentary set out potential risks but did not document cases of interference.

Trading volumes remain small on several contracts

Kalshi launched the biotech markets in July together with data provider AppliedXL. AppliedXL monitors public clinical trials and FDA records to assess whether contracts meet settlement conditions and supplies supporting evidence to Kalshi, which retains final settlement authority.

A review of Kalshi’s biotech category on Wednesday, Nov. 11, 2026, found several contracts with only token volumes. The AstraZeneca tozorakimab contract recorded $303 in cumulative trading volume. Mineralys Therapeutics’ lorundrostat contract had $20 in volume, while United Therapeutics’ ralinepag had none. Those contracts were newly added. Other biotech contracts showed higher but still modest volumes: $11,639 on Summit Therapeutics’ ivonescimab and $4,075 on Gilead Sciences’ anito-cel. A previously resolved cytisinicline contract recorded $23,819.

Kalshi’s FDA approval market for Summit Therapeutics’ ivonescimab showed $11,639 in cumulative trading volume and a 71% probability of approval as of Nov. 11, 2026. These figures are selected contracts and do not represent the entire category, but they raise questions about whether lightly traded markets can deliver robust forecasts.

Kalshi’s defence and the pilot framing

Kalshi highlighted that equities markets carry similar risks and told CNBC that the senators’ concerns “apply equally to the equities market, which appears to be left out of their letter.” Kalshi spokesperson Jack Such said: “The only difference is that the size — and incentive for bad activity — is significantly higher in the equities market than it is on Kalshi.”

Kalshi described the initiative as a limited pilot with AppliedXL, saying the two parties would assess market performance and trader engagement before any broader rollout. When announcing the markets, Kalshi argued the contracts could provide publicly accessible probabilities for individual drug outcomes, in contrast to pharmaceutical stocks that reflect whole-company performance.

What remains unsettled

Critics call for clearer restrictions and stronger surveillance of market participants with access to nonpublic information. Public Citizen and the JAMA commentary both asked whether trial sponsors, participants and regulators should have explicit monitoring duties or bans on trading. The CFTC has been named by Public Citizen as the body that could set or enforce such a framework.[/regulation]

“The only difference is that the size — and incentive for bad activity — is significantly higher in the equities market than it is on Kalshi,” Kalshi spokesperson Jack Such told CNBC.

“Clinical research is based on public trust and should advance medical knowledge and public health,” Robert Steinbrook wrote for Public Citizen.