Two major prediction market platforms, Kalshi and Polymarket, on Monday announced new trading guardrails aimed at curbing insider trading amid growing concerns about market manipulation on recent event contracts.
The announcements coincided with the introduction of a bipartisan bill in the U.S. Senate that would ban event contracts resembling “a sports bet” or “casino-style game.”
Kalshi said it will preemptively bar political candidates from trading on their own campaigns and will prohibit trading by those known to be involved in college and professional sports, including athletes, team personnel, and referees. Polymarket earlier revealed broader prohibitions banning users who trade on stolen confidential information, illegal tips, or anyone who can influence the outcome of a market.
The platforms have come under scrutiny after Polymarket users placed well-timed bets that profited ahead of U.S. and Israeli strikes on Iran and ahead of a U.S. military operation to capture Venezuelan President Nicolás Maduro. Ben Yorke, a former research analyst, told The Guardian that the Iran-related bets “were someone with some degree of inside info,” noting that trades were made at market price using multiple accounts, which appeared intended to obscure identity.
Kalshi said its policy had “been in the works for months” and was implemented to proactively address regulatory guidance and pending legislation on insider trading and market manipulation in prediction markets.
Bipartisan bill would ban sports event contracts
The policy changes arrive after Democratic Senator Adam Schiff and Republican Senator John Curtis introduced the Prediction Markets Are Gambling Act, which would prohibit Commodity Futures Trading Commission-registered entities, including Kalshi and Polymarket US, from listing event contracts that are “indistinguishable from gambling.”
“Sports prediction contracts are sports bets — just with a different name,” Schiff said, arguing the contracts have been offered across all fifty states in violation of state and federal law. Curtis said the legislation “clarifies regulatory jurisdiction, ensuring that states can maintain their authority over sports betting and casino gaming.”
Tarek Mansour, CEO of Kalshi and a member of the Coalition for Prediction Markets lobby group, posted on social media that the bill represented the “casino lobby hard at work,” adding that it was about “protecting monopolies” rather than consumers.
Kalshi, Polymarket and other prediction market platforms, including Coinbase, face legal challenges in multiple states that assert sports-related event contracts constitute gambling and require state licensing. The platforms contend their contracts are not illegal bets and maintain they fall under the exclusive jurisdiction of the CFTC rather than state regulators.
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