Swalwell Ally Blocked From Prediction Market In California Governor’s Race

SAN FRANCISCO — Major Democratic donor and former candidate Stephen Cloobeck has been blocked by the prediction market Kalshi from trading on the California governor’s race.

The suspension, first reported here, came after the wealthy businessman tried to put money this weekend on gubernatorial hopeful, Democratic Rep. Eric Swalwell, a close friend of Cloobeck’s whose candidacy he has been actively supporting since exiting the race in November.

Cloobeck was able to bet on his own campaign months earlier, without facing the same restrictions, he told POLITICO.

He confirmed the bets, sharing screenshots that showed the attempts to place about $1,000 on Swalwell’s victory and $2,000 on the defeat of another candidate, San Jose Mayor Matt Mahan.

Neither trade went through, and the platform informed Cloobeck, “you are currently restricted from trading this market,” according to the screenshots. The businessman said he contacted Kalshi and has yet to receive an explanation of why it took action against him.

The incident happened as prediction market activity surges around the California governor’s race, with more than $3 million so far flowing into Kalshi trades for the crowded field. At last weekend’s Democratic state convention, several candidates warned POLITICO that the boom is bringing new risks, including the potential of insider trading and influencing the democratic process.

Kalshi spokesperson Elisabeth Diana declined to share the reason for the restriction, saying it does not comment on ongoing investigations. “In general,” she said, “politicians are prohibited from trading on their own elections.”

Beyond candidates, platform rules bar campaign staff and the vague category of those who “hold any material, non-public information” from making election bets. Swalwell’s campaign said that Cloobeck is not an employee.

Upon exiting the race last fall, Cloobeck endorsed Swalwell and has donated a maximum contribution of $39,200 to him.

But Cloobeck shared a screenshot indicating that in October, when he was still a candidate, Kalshi allowed him to bet roughly $4,750 on himself winning the election. That would be a violation of its rules, and Diana declined to say why Kalshi did not block Cloobeck until months later.

“What did I do wrong? I’m not a candidate, and I’m not part of any campaign. I’m not getting paid by any campaign,” he said on a call. “Why didn't they ban me betting against myself?”

The company’s head of enforcement and legal counsel, Bobby DeNault, previously told POLITICO, “In the event we ever see a candidate trading on their own candidacy, it triggers disciplinary action on the exchange. Their trade gets frozen. They may be permanently suspended from having an account.”

Swalwell, one of the leading Democratic candidates for governor, has been outperforming his rivals on Kalshi and competitors like Polymarket for months. The House member regularly promotes his Kalshi figures on social media to show momentum.

Swalwell’s campaign declined to comment on the attempted trade.

One rival candidate, former Los Angeles mayor Antonio Villaraigosa, reiterated his opposition to the platforms Tuesday, calling on state officials to cut off Californians’ access to online prediction markets.

The limits on Cloobeck’s account appear to be specific to the governor’s race. He successfully wagered $500 on what Trump will say during his State of the Union address Tuesday.