Several major Wall Street banks have added prediction-market betting rules to their employee codes of conduct, barring employees from betting on contracts linked to financial markets and political events.
Most of them, however, do not impose restrictions on prediction-market betting related to sports and entertainment.
A recent memo from Goldman Sachs states that its policy prohibits staff from participating in event-based contracts linked to financial markets and political events that could create real or perceived conflicts of interest with the bank.
The memo adds that the restriction also applies to events that could create such conflicts for the bank's clients or the broader financial industry.
Reportedly, repeated violations of these rules may result in disciplinary action, including termination of employment and the possible forfeiture of gains from prohibited trades.
Morgan Stanley's employee code of conduct also includes rules on prediction-market betting, along with other trading and investing activities.
Meanwhile, JPMorgan Chase's code of conduct has similar restrictions prohibiting employees from trading on any nonpublic, confidential information, which extends to betting on prediction markets.
Bank of America also prohibits employees from trading certain event and prediction-market contracts, including those tied to individual companies, macroeconomic developments and events involving the financial services industry.
A Bank of America spokesperson confirmed to the media that the bank recently updated its policy to more clearly define prohibited activities and provide employees with examples.
It is not surprising that these banks have included such restrictions in their codes of conduct amid increasing scrutiny of these platforms and worldwide warnings about insider trading risks.
In late March, Kalshi and Polymarket both introduced safety guidelines that seek to prevent insider trading on prediction markets
