Prediction market platforms Kalshi and Polymarket have introduced new restrictions to tackle insider trading, as regulatory pressure intensifies in the United States. The move comes alongside a bipartisan bill targeting event-based contracts that resemble traditional gambling, signaling a major shift for the fast-growing industry.
Platforms Introduce Strict Rules to Prevent Insider Trading
Kalshi and Polymarket both announced new safeguards aimed at improving transparency and preventing market manipulation.
Kalshi revealed that it will prohibit political candidates from trading on markets related to their own campaigns. It will also block athletes, referees, and sports personnel from participating in markets where they could directly influence outcomes. The company said these measures had been in development for months as part of efforts to align with evolving regulatory expectations.
Polymarket followed with broader restrictions, banning users who trade using stolen confidential information, illegal tips, or any form of insider knowledge that could impact market outcomes.
These actions come after growing criticism of prediction markets, particularly following suspicious trading activity tied to geopolitical events. Reports suggest that some users placed highly accurate bets ahead of major developments such as military actions in the Middle East and operations involving global political figures. Analysts believe these trades may have involved individuals with access to non-public information.
The controversy has raised serious concerns about fairness and the integrity of prediction markets, which allow users to speculate on outcomes ranging from elections to global events.
Bipartisan Bill Targets “Gambling-Like” Event Contracts
The timing of these new restrictions is significant, as US lawmakers have introduced a bipartisan bill aimed at banning certain types of prediction market contracts.
The proposed legislation, known as the “Prediction Markets Are Gambling Act,” was introduced by Senators Adam Schiff and John Curtis. It seeks to prohibit platforms regulated by the Commodity Futures Trading Commission (CFTC) from offering contracts that resemble sports betting or casino-style games.
Lawmakers argue that many of these event contracts are effectively gambling products operating under a different label. According to supporters of the bill, such contracts may violate existing state and federal laws governing betting and gaming.
However, industry leaders disagree. Kalshi CEO Tarek Mansour criticized the bill, claiming it is driven by traditional casino interests attempting to protect their market share rather than consumers.
Meanwhile, both Kalshi and Polymarket continue to face legal challenges across multiple US states. Regulators argue that sports-related event contracts fall under gambling laws and require proper licensing, while the platforms maintain that they operate under federal oversight through the CFTC.
