Prediction market Kalshi plans to block athletes, coaches and officials from betting on their sports and to block political candidates from trading on their campaigns, according to reporting by Axios. Kalshi plans to announce that it will preemptively prevent professional and collegiate sports participants from placing trades on their teams or leagues, representing a shift toward technological prevention rather than post-trade investigation.
The move signals growing alarm across the prediction market industry about the reputational damage caused by high-profile suspicious trades. Kalshi rules already prevented athletes from trading on their games and politicians from trading on their campaigns — but this move instals a mechanism that will prevent people in those positions from placing those trades in the first place. The company stated that such trades have always been banned, "but in the past, we needed to investigate after trades were placed." Now it says it has the technological capabilities to be more proactive rather than reactive.
Kalshi's new effort includes partnering with outside contractors, including Integrity Compliance 360 (IC360) to screen athletes when they initially sign up for the platform. The company plans to maintain screening lists across college and professional sports leagues and will prevent known athletes, officials and employees from accessing associated markets.
Rival Polymarket took a different approach on the same day. Polymarket updated its rules on Monday to clarify that certain kinds of bets are prohibited: users cannot act on stolen confidential information, wager using illegal tips, or bet if they are in a position to influence the outcome of an event. The moves reflect industry recognition that allowing insider trading poses an existential threat to market credibility and legitimacy.
The timing of these announcements reflects mounting pressure from multiple directions. Sen. Adam Schiff (D-California) and Sen. John Curtis (R-Utah) introduced the bipartisan Prediction Markets Are Gambling Act to ban CFTC-regulated exchanges from allowing trading on sports or casino games. The Arizona attorney general last week filed criminal charges against Kalshi, accusing the company of operating an unlicensed sports gambling operation.
The regulatory scrutiny has intensified following a series of troubling trades. A brand new account on the prediction market site Polymarket placed a bet of over $30,000 that Venezuelan President Nicolás Maduro would be removed from office by the end of January. A few hours later, the Trump administration conducted its raid and capture of Maduro. The timing of this bet and the gargantuan $400,000 payout raised immediate suspicion that the individual behind the trade had inside knowledge of the administration's planned operation.
Similar concerns emerged around Iran military action. In the hours leading up to the joint U.S.-Israeli attack on Iran, bets on a potential strike were being bought and sold on prediction markets like Polymarket. One trader named "Magamyman" bet big and won $553,000.
These incidents prompted congressional action beyond the sports betting ban. "I think the prediction markets view insider trading as an issue that can kill the golden goose, and they're taking it seriously," gambling and prediction markets analyst Dustin Gouker told Axios. Multiple legislative proposals have been introduced targeting government officials' access to these markets.
The prediction market industry occupies a complex regulatory space. Traditional sportsbooks and casinos want prediction markets to be treated the same way they are — that is, as gambling companies, regulated by the states rather than the CFTC. Several prediction markets, like Kalshi and Polymarket, have registered with the CFTC as a type of derivative exchange called a designated contract market.
Kalshi's head of enforcement sees the new technology as crucial to staying ahead of bad actors. Robert DeNault, head of enforcement at Kalshi, tells Axios that the company will have a better shot at blocking illicit efforts with preemptive bans. Yet the company acknowledged that no system is foolproof. "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. 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".