Prediction market platforms Polymarket and Kalshi have announced separate measures to combat insider trading as political and regulatory scrutiny intensifies. Polymarket has updated and clarified its integrity rules, explicitly prohibiting trading based on insider information or illegal tips on both its DeFi and CFTC-regulated U.S. platforms. Kalshi has implemented proactive screening policies, blocking individuals involved in professional or collegiate sports from trading markets associated with their sports, and also blocking politicians from certain markets using pre-developed lists.
Prediction markets Polymarket and Kalshi are introducing new rules and tooling to remove insider trading from their platforms. These strategic advancements occur as Democratic lawmakers target prediction markets and seek to outlaw certain markets focused on war.
Polymarket has updated its integrity rules, clarifying prohibited behaviors like trading on insider information or illegal tips. “These rule enhancements make our expectations abundantly clear for every participant across both platforms and highlight the compliance infrastructure we have already built,” said Polymarket Chief Legal Officer Neal Kumar.
The rules and examples, such as a coach trading using inside knowledge about a player or a performer buying shares in a market about event songs, are detailed on the firm’s market integrity page. Polymarket uses a multi-layered monitoring system on its DeFi platform and works with partners for its U.S. platform.
Kalshi is taking a more proactive approach, establishing a policy disallowing members connected to sports from trading related markets. The firm is implementing preemptive screening for athletic parties and politicians using screening lists to block trades before they occur. The firm stated these efforts address the CFTC’s guidance and Congressional bill proposals.
Insider trading allegations have drawn significant scrutiny this year. One trader won over $436,000 on a market about the ousting of Venezuelan President Nicolás Maduro, prompting legislative action.
In February, a MrBeast employee was fined and suspended by Kalshi for trading on markets related to the YouTuber’s videos. Two weeks prior, two Israelis were arrested and charged with using classified information to bet on military operations on Polymarket.
Potential violations on Polymarket can be reported via Discord or email. Kalshi has added whistleblower functionality directly on its market pages for flagging potential insider trading.
