Prediction markets are facing increased regulatory scrutiny

Kalshi and Polymarket Tighten Rules on Insider Trading as Regulatory Heat Rises

Prediction markets are getting serious about compliance. As U.S. lawmakers ramp up scrutiny, Kalshi and Polymarket are rolling out new guardrails to curb insider trading and market manipulation.

Kalshi is banning political candidates from trading on their own races and extending restrictions to sports—blocking athletes, coaches, and refs from betting on events they can influence. A new whistleblower tool and partnerships with monitoring firms are also in place. "We're proactively meeting regulatory expectations for transparency," said legal counsel Bobby DeNault.

Polymarket, meanwhile, is tightening its rulebook: clear bans on trading with confidential info, inside information, or by anyone with direct influence over outcomes. It's also cracking down on wash trading, spoofing, and front-running. "New rules sharpen boundaries and strengthen compliance," said legal chief Neal Kumar.

Behind the moves: the CFTC recently flagged risks in prediction contracts tied to sports and sensitive info. Senators Schiff and Curtis also introduced a bill to rein in sports betting-style markets, pushing for state control.

The takeaway? Prediction markets are under structural pressure, but Kalshi and Polymarket still dominate. As the regulatory picture clears, compliance could become the new competitive edge.