Kalshi joins Polymarket in setting new regulations to address the concerns of insider trading due to the growing fears of market manipulation in prediction markets.
US lawmakers push bill on prediction markets
While the US lawmakers induced the bipartisan bill to prohibit event contracts that resemble “sports bets” or “casino-style games,” the two major names in the industry, both Kalshi and Polymarket, have been addressing the concerns of market manipulation on recent event contracts.
The New York-based prediction market, Polymarket, recently announced its new market integrity rules across DeFi and US exchanges due to the concerns that undermine the entire idea of prediction markets, with some users betting with unfair informational advantages.
Kalshi joined the movement and announced on Monday that it would ‘preemptively’ ban political candidates from trading for their own campaign, that is, banning people directly involved in the outcome. They also banned college and professional sportsmen, including athletes, personnel, and referees, from betting on sports markets to avoid any illegal actions favoring the bet.
What fuels debate over fairness in prediction markets?
Support for the decision increased after facing scrutiny over insider trading, soon after the well-timed bets on current geopolitical events and the military capture of the Venezuelan president. Some Polymarket users were found to have profited from these illegal insider‑trading bets.
Suspicions arose as they noticed multiple accounts made and used in an apparent attempt to obscure the user’s identity, and were used to bet on the war. Ben Yorke, Research Analyst, told the media that the bets looked more like the work of “someone with some degree of insider info.”
“Sports prediction contracts are sports bets—just with a different name,” Democratic Senator Adam Schiff said. “These contracts have been offered in all fifty states in clear violation of state and federal law.”
Kalshi cites regulatory alignment on X
The head of enforcement at Kalshi posted on X, addressing the following decisions made after careful consideration. “These efforts, which have been in the works for months, proactively address recent CFTC guidance and Congressional proposals to prevent insider trading,” he said.
Following that, Tarek Mansour, the CEO of Kalshi and a member of the Coalition for Prediction Markets lobby group, posted on X about the bill, captioning it “casino lobby hard at work.”
He was responding to the bipartisan bill in discussion, introduced to ban CFTC-regulated prediction markets from offering contracts on sporting events. He said the ban would only protect the monopolies, not the consumers.
Mansour also posted about the new guardrails for Kalshi, stating that the new systems also look to block it pre-trade.
The platforms are arguing that their contracts are not unlawful wagers and are instead governed solely by the CFTC, not state authorities.
