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Kalshi and Polymarket introduced new trading restrictions on Monday as pressure on prediction markets increased in Washington and at the state level. The two platforms updated their rules and monitoring systems after concerns grew that some traders may have used nonpublic information or personal influence to profit from event contracts.
The moves came as Senators Adam Schiff and John Curtis introduced a bipartisan bill that would ban sports-related prediction contracts offered by federally regulated exchanges.
Kalshi announced that it will preemptively block political candidates from trading on contracts tied to their own campaigns. It also said it will block athletes, coaches, officials, and other people involved in college and professional sports from trading on markets linked to the sports in which they participate or work.
A Kalshi spokesperson stated that the company’s new tools “further demonstrate our commitment to safe markets.” The platform also said it is adding a whistleblower feature and expanding its ability to detect insider trading and market manipulation. Kalshi noted that some of these controls already existed in policy, but the latest step adds systems that prevent certain users from placing restricted trades before they occur.
Polymarket also revised its rules on market activity. The company said users cannot trade on contracts if they have “stolen confidential information” or “illegal tips.” It also clarified that users cannot trade if they “hold a position of authority or influence” over the outcome of an event.
Neal Kumar, Polymarket’s chief legal officer, stated, “These rule enhancements make our expectations abundantly clear for every participant across both platforms.” Polymarket added that it uses a “multi-layered monitoring system” and works with surveillance and technology firms to identify questionable trading. The company said it may refer some cases to law enforcement and take disciplinary action when needed.
The rule changes followed recent criticism of prediction markets after some users placed highly timed bets ahead of military developments involving Iran and Venezuela. Those trades raised fresh questions about whether some participants had advance knowledge of events before the public did.
Critics have argued that self-policing may not be enough. Ben Schiffrin, director of securities policy at Better Markets, said, “Insider trading regulation does not work if it is left to the platforms to police themselves.” Legal observers also said the new rules may reflect an effort by both companies to respond before lawmakers or regulators impose broader controls.
Earlier this month, the Commodity Futures Trading Commission issued guidance on measures exchanges should take to reduce insider trading risks in event contracts. The agency also encouraged exchanges to work with its staff when designing contracts to identify potential risks of manipulation or price distortion. Against this backdrop, both companies moved to present stronger internal controls.
The industry also faced a new threat from Congress. Senators Adam Schiff, a Democrat from California, and John Curtis, a Republican from Utah, introduced the “Prediction Markets Are Gambling Act” on Monday. The bill would ban CFTC-regulated entities from listing contracts that resemble “a sports bet or a casino-style game.”
Schiff stated, “Sports prediction contracts are sports bets — just with a different name.” Curtis said the legislation would ensure that states keep authority over sports betting and casino gaming. The proposal came as several states continued to challenge platforms such as Kalshi and Polymarket, arguing that many of their sports contracts function like gambling products.
Kalshi and Polymarket have tried to expand their reach through sports-related offerings and partnerships. However, the new bill could restrict a fast-growing part of their business. The latest compliance measures from both platforms appeared aimed at showing regulators that they are taking market conduct concerns seriously, while the legal fight around prediction markets continues.
Also Read: Why Prediction Markets are the Hidden Goldmine of DeFi
