Two leading prediction-market platforms, Kalshi and Polymarket, announced new trading restrictions aimed at reducing insider trading and market manipulation on event contracts. The moves come amid heightened scrutiny of well-timed trades that appeared to profit from nonpublic information and alongside a newly introduced bipartisan Senate bill targeting certain event markets.
Kalshi said it will proactively bar political candidates from trading on their own campaigns and will prohibit trading by individuals directly involved in college or professional sports, including athletes, team staff, and referees. Polymarket previously rolled out broader prohibitions that bar anyone trading on stolen confidential information, illegal tips, or anyone positioned to influence a market’s outcome.
The platforms drew attention after a series of profitable bets placed ahead of U.S. and Israeli strikes related to Iran and ahead of a U.S. operation to capture Venezuelan President Nicolás Maduro. Former analyst Ben Yorke told The Guardian that the Iran-related trades looked like they came from parties with inside information, noting trades were executed at market price from multiple accounts in ways that appeared aimed at obscuring identities.
Kalshi said its policy had ‘been in the works for months’ and that the changes are a proactive response to evolving regulatory guidance and proposed legislation focused on insider trading and manipulation in prediction markets.
At the same time, Senators Adam Schiff (D) and John Curtis (R) introduced the Prediction Markets Are Gambling Act, which would bar Commodity Futures Trading Commission-registered entities from listing event contracts that regulators deem ‘indistinguishable from gambling.’ Supporters of the bill argue sports-style prediction contracts function as sports betting and should remain under state gaming authority. Kalshi CEO Tarek Mansour criticized the measure as protecting entrenched gambling monopolies.
Kalshi, Polymarket, Coinbase and other platforms face legal challenges in multiple states alleging some event contracts amount to illegal gambling requiring state licenses. The companies maintain their products are not traditional bets and contend they fall under federal CFTC jurisdiction rather than state regulation. The policy updates signal industry efforts to address manipulation risks as lawmakers and regulators weigh tighter rules.