Polymarket and Kalshi tighten insider trading rules as scrutiny grows

Polymarket and Kalshi announced new measures to curb insider trading on their prediction market platforms as political and regulatory scrutiny increases. Polymarket: Updated integrity rules clarify prohibited conduct on both its DeFi and CFTC-regulated U.S. platform. The rules target trading on insider information or illegal tips, supported by a multi-layer monitoring system and a real-time control desk to flag unusual activity. The firm also said it is working with Peter Thiel’s Palantir to build surveillance systems for sports-focused prediction markets, using Palantir’s Vergence AI engine and associated transaction/user screening. Kalshi: Introduced stricter policies and preemptive screening to block trading before it occurs. Kalshi disallows members connected to college or professional sports (such as coaches or players) from trading markets “associated with the sports they are involved with.” It also applies screening lists for both athletic parties and politicians, aiming to align with CFTC guidance and pending congressional proposals. The backdrop includes insider trading allegations in U.S. prediction markets, including cases involving large payouts and prior disciplinary actions by Kalshi. Separately, Nevada issued a temporary ban on Kalshi event contracts for 14 days, pending further legal proceedings. For crypto traders, tighter insider trading controls may improve market integrity and reduce the risk of sudden contract distortions, but the move also signals ongoing regulatory pressure across prediction-market venues tied to broader sentiment.