Prediction markets Kalshi and Polymarket on Monday revealed new policies to prevent insider trading — as a bipartisan Senate duo introduced legislation to bar such platforms from allowing people to bet on sports and casino-style games.
Polymarket said it was cracking down on using stolen information and illegal tips, among other steps, while Kalshi announced guardrails to prevent politicos and athletes from betting on outcomes they could influence.
“We are committed to banning people who try to cheat,” Kalshi said in a blog post. “Ensuring market integrity is not just a goal – it is a cornerstone of our business model.”
The efforts came as prediction markets have been facing growing scrutiny over controversial wagers placed on US military action in Venezuela and Iran, and as critics like bill sponsors Sens. John Curtis (R-Utah) and Adam Schiff (D-Calif.) say the sites are hooking people on sports- and casino-style gambling.
In addition to cracking down on stolen confidential info and trading on illegal tips, Polymarket’s updated rules bar trading by people who can affect the outcome they’re betting on.
“Markets thrive on clarity,” Polymarket’s chief legal officer Neal Kumar said in a statement. “These rule enhancements make our expectations abundantly clear for every participant across both platforms and highlight the compliance infrastructure we have already built.”
Kalshi said its new guardrails will “aim to preemptively block political candidates if they try to trade on their own campaigns.” The updated rules will also block college and pro athletes from betting in “markets associated with sports they are involved in.”
Meanwhile, the bill from Sens. Curtis and Schiff would bar any entity registered with the Commodity Futures Trading Commission from listing or facilitating transactions linked to sporting events or athletic competitions. It would also prohibit bets tied to casino-style games, including poker and blackjack.
The legislation marks the first Senate effort to address the rapid growth of sports-linked trading on platforms that operate outside traditional state-regulated gambling frameworks.
Last week, Arizona’s attorney general filed criminal charges against Kalshi accusing it of operating an illegal gambling business. Kalshi rejected the allegations as based on “paper-thin arguments.”
“States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it,” Kalshi fired back.
Last Thursday, Major League Baseball announced a new partnership with Polymarket and the CFTC to establish guidelines aimed at managing risk while enhancing fan engagement.
Schiff took aim at jargon used by the prediction markets, which often refer to bets as “contracts.”
“Sports prediction contracts are sports bets — just with a different name,” he said in a statement.
“And yet, these contracts have been offered in all fifty states in clear violation of state and federal law. Rather than enforce the law, the CFTC is greenlighting these markets and even promoting their growth. It’s time for Congress to step in.”
Kalshi said the bill would have adverse consequences.
“Banning sports on regulated prediction markets would just push this behavior offshore, where no regulation exists,” spokesperson Elisabeth Diana told The Post in a statement. “It’s clear this bill is motivated by casino interests that are threatened by competition.”
The CFTC didn’t immediately respond to a request for comment.
While sports betting is typically overseen at the state level, prediction markets use financial instruments such as futures and commodity contracts, placing them under federal jurisdiction. Recent months have seen lawmakers, state governments and federal regulators debate about who should have oversight of event and sports contracts on prediction platforms.
Prediction markets have grown rapidly in the US over the past year, with trading volumes exceeding $1.2 billion during this year’s Super Bowl and surpassing $4.5 billion for the week, according to industry estimates.
“Too many young people in Utah are getting exposed to addictive sports betting and casino-style gaming contracts that belong under state control, not under federal regulators,” said Curtis.
A series of eye-popping wagers has drawn criticism of the industry in recent months.
Anonymous Polymarkets traders made hundreds of thousands of dollars for correctly predicting the January fall of Venezuela’s President Nicolás Maduro.
Earlier this month, Kalshi refused to pay out wagers that accurately predicted the February death of Iranian Supreme Leader Ayatollah Ali Khamenei, saying its guidelines prohibited markets “directly tied to death.”
Most recently, Polymarket bettors allegedly made death threats to an Israeli reporter as they pressured him to change an article he wrote about an Iranian missile strike.
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