Two leading prediction market platforms, Kalshi and Polymarket, announced new rules to combat insider trading on Monday. The moves coincided with the introduction of a bipartisan Senate bill aiming to ban event contracts deemed as gambling. The platforms have faced scrutiny after users appeared to profit from bets made ahead of military strikes in Iran and Venezuela.
Kalshi and Polymarket introduced new trading restrictions addressing insider trading concerns on Monday. The platforms have faced criticism over potential market manipulation on contracts related to geopolitical events.
Kalshi said it would ban political candidates from trading on their own campaigns. It also barred individuals involved in professional and college sports, such as athletes and referees.
Polymarket announced broader prohibitions against users trading with stolen confidential information or illegal tips. Its rules also ban those who can influence the outcome of a market.
Analysts noted that bets on Polymarket before U.S. and Israeli strikes on Iran showed signs of insider knowledge. Former analyst Ben Yorke told The Guardian the bets were placed at market price using multiple accounts.
The same day, Senators Adam Schiff and John Curtis introduced the Prediction Markets Are Gambling Act. The bipartisan bill would ban Commodity Futures Trading Commission-registered entities from listing contracts resembling sports bets.
“Sports prediction contracts are sports bets — just with a different name,” Schiff stated. Curtis said the legislation clarifies regulatory jurisdiction, allowing states to maintain authority over sports betting.
Kalshi CEO Tarek Mansour posted on X that the bill was the “casino lobby hard at work.” He added, “This bill isn’t about protecting consumers; it’s about protecting monopolies.”
The platforms are facing legal action in multiple states that claim their sports contracts constitute illegal gambling. They argue these contracts are not betting and fall under exclusive CFTC jurisdiction.
