Kalshi and Polymarket rush to ban insider trading as senators move to curb prediction markets
NEW YORK — Kalshi and Polymarket, the two biggest prediction market platforms, rushed to announce new industry guardrails on Monday after two key senators announced legislation that could severely curtail the industry’s prospects.
Kalshi said it would ban political candidates from trading on their own campaigns, and it would preemptively block anyone involved in college or professional sports from trading contracts related to the sports they play or are employed by.
Polymarket instituted a broader ban than Kalshi. Its rules now say clearly that users cannot trade on contracts where they might possess confidential information or could influence the outcome of an event. This would include athletes but could also include company officials, policymakers or anyone who would have enough influence to affect the outcome of an event or know the information in advance.
Polymarket, in particular, has faced intense criticism after some of its users made substantial bets ahead of the war in Iran and the military action in Venezuela, earlier this year. Those users appeared to have profited handsomely from knowing in advance that President Donald Trump was going to take military action in those regions.
Sen. Adam Schiff, D-California, and Sen. John Curtis, R-Utah, introduced broad legislation on Monday that would ban prediction markets from creating contracts related to sports. If enacted, the ban would wipe out much of Kalshi’s business model and substantially impact Polymarket’s business as well. While prediction markets allow users to bet on everything from the weather to political events, much of their recent growth has been in sporting events.
Shares of the parent company of FanDuel and DraftKings rose sharply on Monday after the senators’ announcement.
While Sen. Schiff and Sen. Curtis are not the first politicians to propose a broad ban on the activities of prediction markets, the fact that both political parties are becoming skeptical of them is a cause of alarm for the industry. Several states have preemptively banned Kalshi and Polymarket, saying that the platforms effectively are a sports betting industry with a technological twist. While Kalshi has tried to sue to get its platform allowed in certain states, like Nevada and Utah, it has found little success so far.
Kalshi and Polymarket have found backing from the Trump-controlled Commodity Futures Trading Commission, the federal regulator of derivatives and other prediction markets activities. The CFTC’s chairman, Michael Selig, has said he would back Kalshi in any of its legal battles at the state level, arguing that federal law preempts any state law on this issue.
