Hassan Maishera
TL;DR
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Leading prediction marketplaces Kalshi and Polymarket are taking measures to curb insider trading.
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This comes U.S. senators introduced a bill on Monday to ban sports betting on prediction markets.
Kalshi and Polymarket Tighten Insider Trading Controls
Leading prediction market platforms Polymarket and Kalshi are launching new measures to curb insider trading and market manipulation. This latest development comes amid regulatory pressure from Capitol Hill intensifies.
In a blog post published Monday, Kalshi announced that it has introduced new screening tools to block political candidates from trading on their own elections, expanding existing restrictions that already apply to elected officials.
The platform is introducing a new policy focused on sports-related markets, leveraging screening lists created in collaboration with integrity monitoring firm IC360 to prevent athletes, coaches, referees, and other insiders from trading on events in which they are involved.
Although such trades were already prohibited, Kalshi acknowledged that enforcement had mostly been reactive, relying on investigations after trades occurred. To strengthen oversight, the platform has also added a whistleblower feature directly within its trading interface, making it easier for users to report suspicious activity.
Bobby DeNault, Kalshi's enforcement and legal counsel, pointed out that these measures have been in development for months to "proactively address" guidance from the Commodity Futures Trading Commission and Congressional proposals to prevent insider trading.
Polymarket Updates its Governing Documents
Polymarket also announced on Monday that it has updated its governing documents across both its decentralized platform and its CFTC-regulated U.S. exchange, introducing clearer rules around insider trading and enforcement.
The prediction marketplace outlined three main categories of prohibited conduct: trading on stolen confidential information, trading on illegal tips, and trading by individuals who can directly influence an event's outcome.
Polymarket also expanded restrictions on broader forms of market abuse, including spoofing, wash trading, and front-running.
Neal Kumar, chief legal officer of Polymarket, stated that,
"These rule enhancements make our expectations abundantly clear for every participant across both platforms and highlight the compliance infrastructure we have already built."
These latest developments come amid growing scrutiny from the U.S.senate. On Monday, U.S. senators Adam Schiff and John Curtis introduced the "Prediction Markets Are Gambling Act," seeking to bar prediction contracts tied to sports or casino-style games from being listed or traded on a registered platform.
If approved, this bill will cover various products, including contracts linked to professional and college sports, as well as casino-style games such as slots, blackjack, roulette, and bingo.
Furthermore, legislative efforts are increasing around prediction markets, including the Death Bets Act, which seeks to ban event contracts tied to war or an individual's death.
