Leading prediction markets companies Kalshi and Polymarket have unveiled new rules to prevent insider trading on their platforms.
Kalshi’s new measures are aimed at political and sports insider trading and include preemptive politician screening to prevent candidates from trading on their own campaigns.
Kalshi’s preemptive sports screening will block people involved in college and professional sports, including athletes, personnel, and referees, from trading on sports in affiliated leagues they are involved in.
“These efforts, which have been in the works for months, proactively address the CFTC’s guidance and Congressional bill proposals to prevent insider trading,” said Bobby DeNault, Kalshi’s head of enforcement and legal counsel. “Kalshi looks forward to engaging with regulators and other industry participants to make these efforts a standard across the industry.”
The move by Kalshi follows the recent advisory from the CFTC which highlighted Designated Contract Markets’ obligations with respect to preventing market manipulation and insider trading.
“The guardrails we built use state-of-the-art technology and screening lists, but no screening system is perfect, and motivated bad actors consistently try to find a way,” DeNault added. “To that end, we are also adding a whistleblower functionality straight in our market page, which makes it easier for our community to flag potential violations as they go through our public trading data.”
Polymarket also announced updated market integrity rules on Monday, focused on three core categories of prohibited insider trading.
Trading using stolen information is prohibited when “using that information would violate a preexisting duty or obligation of trust or confidence owed to another person or entity”.
Trading on illegal tips is also prohibited, with illegal tips being “confidential information passed to them by someone who owed a preexisting duty of trust or confidence to someone else, if they know or have reason to know that the person who shared the information would be prohibited from trading on it themselves”.
Anyone who can influence the outcome of an event is also banned from trading on that event under the updated rules from Polymarket.
“Markets thrive on clarity,” said Neal Kumar, chief legal officer of Polymarket. “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.”