Kalshi and Polymarket have both introduced new safety guidelines which seek to prevent insider trading efforts on prediction markets, including those conducted by politicians, athletes and “other relevant people.”
The new guidelines follow recent legislative proposals also hoping to regulate prediction markets, including the Prediction Markets Are Gambling Act which could prohibit operators registered under the Commodity Futures Trading Commission (CFTC) from offering any contracts resembling a sports bet or casino-style game.
“These efforts, which have been in the works for months, proactively address the CFTC’s guidance and Congressional bill proposals to prevent insider trading,” Kalshi said within the release.
“All markets have bad actors, and we believe that staying ahead of bad actors means developing new technology and policies.”
Preventative measures unveiled by Kalshi include preemptive screenings to block political candidates and individuals involved in college and professional sports from trading on markets they are associated with.
Polymarket updated market integrity rules across its DeFi platform and CFTC-regulated US exchange, as well as introduced dedicated pages where users can gain clarification on the new measures and report any suspicious activity.
The updated rules help define categories of prohibited insider trading conduct such as stolen confidential information, the use of illegal tips and trading conducted by those who could influence the result.
"Markets thrive on clarity. These rule enhancements make our expectations abundantly clear for every participant across both platforms and highlight the compliance infrastructure we have already built,” Polymarket Chief Legal Officer Neal Kumar said.
“As Polymarket continues to scale, we will build on our foundation with clear communication to Polymarket’s users to ensure our markets do what they do best – surface truth."
On March 5, Oregon Senator Jeff Merkley and Minnesota Senator Amy Klobuchar filed the End Prediction Market Corruption Act, which aims to “crack down” on potential insider trading efforts in event contract wagering.
The End Prediction Market Corruption Act would prohibit US government officials such as the President, Vice President and members of Congress from trading event contracts. Any violations of the legislation would result in civic penalties of $10,000, administered by the US Attorney General.
The Associated Press formed a new agreement with Kalshi to provide the prediction markets operator with voter count data and race calls for national and major state elections in the US on March 3
