A prediction market platform has announced new measures to combat insider trading by requiring employment details from customers who want to participate in certain high-risk betting markets.
Kalshi revealed Tuesday it will implement a scoring system to identify markets with elevated risks of insider trading or manipulation. Users wanting to trade in these flagged markets must provide workplace information, and those identified as potential insider traders will face trading bans in those specific areas.
The decision comes after multiple cases where individuals exploited confidential information for financial gain on prediction platforms. Recent examples include former Congressman George Santos, who faces investigation for allegedly placing illegal bets about his attendance at President Donald Trump’s State of the Union address. Additionally, a U.S. Army soldier was charged in April for using classified intelligence to earn $400,000 on Polymarket by betting on U.S. military operations timing in Venezuela.
“By implementing these new integrity measures, we continue to lead the industry on the issue of market integrity among federally regulated prediction markets,” said Robert DeNault, head of enforcement at Kalshi, in a statement.
The company emphasized that collected employment data will only be accessed when suspicious trading patterns emerge in specific markets.
“This lets us identify presumptive insiders – people who have material, nonpublic information about a market’s outcome – and screen them out before a trade is ever placed,” Kalshi said in a statement.
Prediction markets are working to establish credibility with the public and regulators as legitimate platforms for wagering on various outcomes ranging from sports and weather to political events. Kalshi has been positioning itself as distinct from major rival Polymarket, which operates primarily outside U.S. regulatory oversight. The company has also reported making at least 20 referrals to law enforcement and securities regulators regarding market manipulation and insider trading concerns.
In February, Kalshi established an Independent Surveillance Audit Committee to address market manipulation and insider trading issues. The company stated that this week’s announced changes stem partially from that committee’s recommendations.
