Polymarket and Kalshi Take Steps to Address Insider Trading Amid Increasing Oversight

Polymarket and Kalshi Strengthen Measures Against Insider Trading

Prediction markets Polymarket and Kalshi have each introduced new initiatives to combat insider trading, unveiling updated policies and tools on Monday as regulatory scrutiny around prediction markets intensifies.

These developments come as Democratic lawmakers increase pressure on prediction markets, seeking to ban certain types of markets, particularly those related to war.

Polymarket’s Enhanced Integrity Rules

Polymarket has revised its integrity guidelines, clarifying what constitutes insider trading—such as acting on privileged information or illicit tips—which is strictly forbidden on both its decentralized finance (DeFi) platform and its CFTC-regulated U.S. service.

“These rule improvements set clear expectations for all users across our platforms and emphasize the robust compliance systems we have established,” stated Neal Kumar, Polymarket’s Chief Legal Officer.

Kumar added, “As Polymarket grows, we will continue to communicate transparently with our community to ensure our markets remain a reliable source of truth.”

Examples of banned activities include, for instance, a coach using inside knowledge to trade on sports contracts, or a performer purchasing shares in a market about which songs will be played at an event. More details are available on Polymarket’s market integrity page, accessible via the site’s footer.

The company employs a “multi-layered monitoring system” to detect potential insider trading on its DeFi and international platforms. In the U.S., Polymarket collaborates with partners and operates a real-time control desk to spot suspicious or disruptive trades.

Recently, Polymarket also announced a partnership with Peter Thiel’s Palantir to develop surveillance systems specifically for sports-related prediction markets.

Polymarket, Peter Thiel's Palantir Eye 'Surveillance Models' for Sports Prediction Markets

Kalshi’s Proactive Approach

Kalshi has taken a preventative stance by introducing a new policy that prohibits individuals with direct ties to college or professional sports—such as coaches and athletes—from trading in markets related to their own sports.

The platform is also rolling out pre-trade screening for both sports figures and politicians, using custom screening lists to block potentially problematic trades before they occur.

Industry Response and Recent Incidents

“These initiatives, which have been in development for months, are designed to proactively address guidance from the CFTC and proposed Congressional legislation aimed at curbing insider trading,” the company explained.

Allegations of insider trading within prediction markets have attracted significant attention this year, with anonymous traders reportedly earning large sums from markets tied to government actions.

For example, one trader earned over $436,000 by betting on the January removal of Venezuelan President Nicolás Maduro. This prompted New York Representative Ritchie Torres to propose legislation that would bar federal employees from participating in prediction markets when they possess relevant non-public information.

In February, a MrBeast employee was fined and suspended by Kalshi for trading on markets related to what MrBeast (Jimmy Donaldson) would say in YouTube videos. The individual, video editor Artem Kaptur, was subsequently suspended and later terminated from Beast Industries.

Two weeks earlier, two Israeli nationals were arrested and charged with using confidential information to place bets on military operations via Polymarket.

Reporting and Whistleblower Features

According to Polymarket’s updated rules, users can report suspected insider trading through Discord or email. However, specifics about the investigation process or the number of reports remain unclear. Kalshi has also added a whistleblower feature to its market pages, enabling users to flag suspicious activity directly.

Representatives for both Polymarket and Kalshi did not immediately respond to Decrypt’s request for comment.