Kalshi and Polymarket Rush New Trading Rules as Senate Sports Ban Looms
Kalshi and Polymarket rolled out new insider trading rules on Monday within hours of Senators Adam Schiff (D-CA) and John Curtis (R-UT) introducing the Prediction Markets Are Gambling Act, legislation that would prohibit both CFTC-regulated platforms from listing contracts tied to professional sports, college sports, and casino-style games including slots, blackjack, roulette, and bingo.
The timing was not coincidental. Most of the recent growth on both platforms has come from sports markets, and both companies have signed partnership deals with sports teams and leagues. A blanket ban on sports contracts would remove the fastest-growing segment of each platform’s business.
Kalshi’s new measures centre on two areas. For political markets, the platform is expanding existing restrictions on elected officials to block candidates from trading on their own elections.
For sports, Kalshi is implementing screening lists developed with IC360, an integrity monitoring firm that works with professional sports leagues, to identify and block athletes, coaches, referees, and other insiders from trading on events they are involved in.
Bobby DeNault, Kalshi’s enforcement and legal counsel, said the measures had been in development for months. “These features further demonstrate our commitment to safe markets,” a Kalshi spokesperson said.
Polymarket Goes Broader
Polymarket’s update covers more ground. The company rewrote its governing documents across both its decentralized platform and its CFTC-regulated US exchange to establish three prohibited conduct categories: trading on stolen confidential information, trading on illegal tips, and trading by anyone who can directly influence an event’s outcome.
That last category extends beyond athletes to cover company executives, policymakers, and government officials with advance knowledge of decisions that markets have created contracts around.
Polymarket also tightened rules against spoofing, wash trading, and front-running, and said it uses multi-layered surveillance combining onchain transparency with third-party monitoring. “These rule enhancements make our expectations abundantly clear for every participant across both platforms,” said Neal Kumar, Polymarket’s chief legal officer.
The Context Both Companies Declined to Lead With
Neither company directly referenced the incidents driving the legislative push: large bets placed on Polymarket before US military strikes on Iran and Venezuela that appeared to anticipate classified government decisions, and suspicious trading on a Polymarket inflation market in Argentina that appeared to front-run the official figure by 15 minutes.
Those events, more than any theoretical concern, are what turned Congressional attention toward prediction markets. The CFTC and Donald Trump Jr, who has invested in Polymarket and serves as a paid strategic adviser to Kalshi, remain aligned with the platforms. Shares of Flutter Entertainment, parent of FanDuel and DraftKings, rose sharply Monday on the bill’s introduction.
