Kalshi and Polymarket have introduced new preventative measures against insider trading as prediction markets face arguably the most intense public and political scrutiny the platforms have ever faced.
The duo announced the new safeguards in separate announcements, revealed by Kalshi’s Head of Enforcement and Legal Counsel, Bobby DeNault, and Polymarket’s Chief Legal Officer, Neal Kumar.
Prediction markets are facing legal challenges in the US, regulatory pushback in other markets, and general scrutiny around insider trading. The ongoing war involving the US, Israel and Iran has become a particular source of scrutiny.
Controversy has surrounded both insider trading – with bets placed on a potential ceasefire agreement occurring before Donald Trump’s recent Truth Social post about negotiations with the Iranian government – and the general unsavoury nature of bets being placed on war and conflict.
Are Kalshi and Polymarket sealing the gaps?
“Markets thrive on clarity,” said Polymarket’s Kumar. “These rule enhancements make our expectations abundantly clear for every participant across both platforms and highlight the compliance infrastructure we have already built.
“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.”
Polymarket’s new rules revolve around trading on stolen or confidential information, trading on illegal tips, and trading by those who can influence the outcome of a certain event or market.
The platform’s users have been banned from trading on contacts if they possess confidential information about an outcome, from trading on confidential information passed on to them by people with prior knowledge of an outcome.
Perhaps the most significant rule is the prohibition of people in a ‘position of authority or influence sufficient to affect the outcome of the underlying event’. This could effectively be seen as a ban on politicians and other decision makers from placing Polymarket bets.
Kalshi, meanwhile, has introduced what it calls ‘primitive political screening’. The firm states that it has developed tools to preventively block political candidates who try to trade on their own campaigns, something it stressed has always been banned on its platform.
It has also launched preemptive sports screening and a new policy blocking those involved in both college and professional sports, including athletes, persona and referees, from placing bets via its ‘sports event contract’ products.
Again, it stated that trades by those involved in high-level sports have always been banned, but by placing a preemptive block it hopes to negate the need to investigate trades post-placement.
“Today, we’re announcing an expansion of our internal capabilities and policies against insider trading and market manipulation,” said DeNault.
“We’re launching new technological guardrails that preemptively block politicians, athletes, and other relevant people from trading in certain politics and sports markets.
“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 looks forward to engaging with regulators and other industry participants to make these efforts a standard across the industry.”
Predictions platforms, particularly Kalshi and Polymarket, are no strangers to scrutiny – they have faced it from political opponents, sports betting and gaming incumbents, and state regulators, to name a few examples.
The fallout from the US military actions in Venezuela earlier this year, and now Iran in the past couple of weeks, have led to extensive media coverage of allegations of insider trading on both platforms.
It seems they have taken note, but they’ve still got some other fights on their hands…
Battle lines drawn
Even without allegations of insider trading on US military activities, Kalshi and Polymarket were always going to have some legal and political battles to fight in 2026.
Many US state gambling regulators have taken up legal arms against predictions, and this month they made some gains. In Nevada, a District Judge issued a temporary suspension order against Kalshi, effective for 14 days.
This is a small victory in a long-running war against predictions waged by the Nevada Gaming Control Board (NGCB). Nevada had previously sent a cease-and-desist order to Kalshi in 2025, prompting the legal back-and-forth between the two.
“Prediction markets, to the extent they facilitate unlicensed gambling, are illegal in Nevada, and we have a statutory duty to protect the public,” said Mike Dreitzer, Chair of the NGCB, following the judge’s ruling last week.
On the topic of cease-and-desist orders, one issued in Arizona has now escalated into a full blown criminal case. Last week, the state became the first to file criminal charges against Kalshi, accusing it of election betting and illegal gambling.
Opposition has now reached the hall of Congress. On Monday, Senators Adam Schiff (Democratic Party) and John Curtis (Republican Party) introduced legislation seeking to ban sports events contracts across the country.
The duo have openly accused prediction markets of being a form of betting – something that the American Gaming Association (AGA) has argued for some time. They also want to prevent platforms like Kalshi and Polymarket from launching ‘casino-style games’.
“Sports prediction contracts are sports bets — just with a different name,” said Schiff. “And yet, these contracts have been offered in all 50 states in clear violation of state and federal law.”
Of course, a federal ban on predictions would hit some operators now too – Fanatics, DraftKings and FanDuel all having entered the space by now.
The AGA, however, has celebrated the ‘Prediction Markets Are Gambling Act’ as a ‘critical step’ in reaffirming that sports betting is ‘governed by state and tribal law’ and not by federal ones, in a post on X.
The American Gaming Association applauds the introduction of the Prediction Markets Are Gambling Act by @SenAdamSchiff and @SenJohnCurtis, a critical step to to uphold state and tribal sovereignty and protect consumers. pic.twitter.com/ZpXsj1N2TA
— American Gaming Association (@AmericanGaming) March 23, 2026
In response, Kalshi has invoked an interesting argument – the black market.
This will be familiar to many in the betting industry, which routinely invokes this argument against instances, whether perceived or real, of over-taxation or over-regulation, as seen in the debate around UK gambling taxes last year.
Kalshi’s Head of Communications. Elisabeth Diana, stated: “Banning sports on regulated prediction markets would just push this behaviour offshore, where no regulation exists.
“It’s clear this bill is motivated by casino interests that are threatened by competition. They’re more worried about protecting their monopolies than protecting consumers.”
In the grand scheme of things, it’s unlikely that Schiff and Curits’ anti-predictions bill will become law, in this writer’s viewpoint. This is no criticism of Schiff and Curtis, but more a reflection of politics – some 90% of bills introduced to the US Senate fail to become law.
The prediction platforms are also not alone. TheCommodity Futures Trading Commission (CFTC) seems firmly in their camp under Trump appointee Michael Selig, and all signs are pointing towards a state-vs-federal showdown over the platforms.
This comes after a number of European regulators made their views on predictions clear. France has labelled them as illegal and dangerous, and Polymarket has been kicked out of this nation as well as Belgium, the Netherlands, Romania, and Portugal to name a couple of examples.
Latin American nations like Argentina are also taking a confrontational stance, while Brazilian authorities stated that the country has no clear regulatory framework around predictions shortly after Kalshi launched there a week ago.
Polymarket and Kalshi can realistically afford to leave these markets, which pale in comparison to the size and value of the US. Federal and state pressures in the US are much more concerning for the firms, however, and their future as businesses hinges on these stateside legal battles.