Polymarket and Kalshi, the two largest prediction market platforms, announced new rules, to crack down on insider trading and market manipulation.
This move came on the same day that bipartisan senators Adam Schiff (D-CA) and John Curtis (R-UT) introduced legislation to ban sports betting and casino-style games on CFTC-regulated prediction markets like these platforms.
The timing suggests the companies are proactively strengthening self-regulation to address growing scrutiny, maintain market trust, and potentially head off stricter federal oversight. Polymarket updated its market integrity rules for both its DeFi platform and its CFTC-regulated U.S. exchange.
It explicitly defined three core categories of prohibited insider trading: Trading on stolen confidential information: You can’t trade if you have non-public info about an event’s outcome where using it would violate a duty of trust or confidence to someone else.
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Trading on illegal tips: You can’t trade on confidential info passed to you by someone who owed a duty of trust to another party (if you knew or should have known they couldn’t trade on it themselves).
Trading by those who can influence the outcome: You’re barred if you hold a position of authority or influence sufficient to affect the event you’re betting on; this could include athletes, company execs, policymakers, etc.
The rules also ban broader manipulation tactics like spoofing, wash trading, fictitious transactions, self-dealing, front-running, and other disruptive practices. Polymarket added dedicated “Market Integrity” pages with examples and a way for users to report suspicious activity.
Chief Legal Officer Neal Kumar said: “Markets thrive on clarity. These rule enhancements make our expectations abundantly clear for every participant across both platforms.”
Kalshi took a more proactive, tech-driven approach with “new technological guardrails” that preemptively block certain high-risk trades before they happen rather than just investigating afterward. Political candidates are blocked from trading on their own campaigns. Elected officials are also restricted.
Sports screening: Athletes, coaches, referees, and other personnel in college or professional leagues are blocked from trading contracts tied to the sports/leagues they’re involved in. Kalshi built screening lists in partnership with IC360 to identify and block these individuals automatically.
Enhanced detection tools for insider trading and manipulation overall. A new whistleblower feature on market pages so users can easily flag suspicious activity based on public data. Kalshi emphasized that “ensuring market integrity is not just a goal – it is a cornerstone of our business model” and said it is “committed to banning people who try to cheat.”
The company also referenced new CFTC guidance on these issues. Prediction markets have faced increasing criticism over potential insider trading—examples include unusually accurate bets on geopolitical events like U.S./Israeli actions in the Middle East or political outcomes where traders appeared to have non-public information.
The new Senate bill specifically targets sports-related contracts on platforms like Kalshi and Polymarket, arguing they resemble illegal gambling in some states. By moving quickly on self-imposed bans, the companies are signaling they’re serious about cleaning up their markets while the industry remains largely unregulated compared to traditional betting or securities markets.
In short, Polymarket and Kalshi are drawing a clear line: insider trading and manipulation won’t be tolerated. Whether these steps satisfy regulators and lawmakers remains to be seen, but they represent the biggest coordinated push yet by the industry to police itself.