Prediction Markets Go Full SEC Mode: Polymarket & Kalshi Build Walls Against Insider Degens

Prediction market heavyweights Polymarket and Kalshi have decided the wild west era is over, slapping down new policies to police insider trading like a crypto exchange that just hired a compliance officer from Wall Street. Polymarket rolled out updated market integrity rules that cover both its permissionless DeFi playground and its buttoned-up, CFTC-regulated U.S. exchange.

Polymarket’s new rulebook essentially lays out a holy trinity of forbidden degen behavior. Users can no longer trade on pilfered confidential info, act on illegally tipped data, or place bets when they're sitting on enough power or influence to literally move the needle on an event’s outcome. The platform also dropped some "Market Integrity" pages, which are basically explainers for how not to get banned and a convenient snitch line for reporting your sketchy friends.

Going beyond just insider trading, Polymarket's regulations also put the kibosh on spoofing, wash trading, fake transactions, self-dealing, front-running, info misuse, and any other creative market-sabotaging shenanigans that could turn an orderly market into a glitchy meme coin chart.

Not to be outdone, rival prediction shop Kalshi has also beefed up its "internal capabilities and policies" to fight insider trading and manipulation, presumably after realizing some bets looked a little too clairvoyant. The platform is deploying new tech guardrails designed to preemptively stop politicians, athletes, and other relevant insiders from trading in the very politics and sports markets they could influence—a concept as novel as a transparent rug pull.

Kalshi announced tools specifically engineered to block political candidates from betting on their own campaigns, because apparently, we needed software to tell us that's a bad idea. The platform is also rolling out sports-specific screening, teaming up with IC360 partners to use curated "no-bet" lists that preemptively bar college and pro athletes, team personnel, and even referees from trading in markets linked to their own leagues—effectively treating insider knowledge in sports with the same seriousness as a missed offside call.

Furthermore, Kalshi has added a whistleblower button directly on its market pages, letting the community play detective and flag potential violations while browsing public trading data, because crowd-sourced surveillance is the new community moderation.

These policy sprints come at a time when regulators and lawmakers are peering into prediction markets with the intensity of a degen scanning a whitepaper for the word "airdrop." Senators Adam Schiff and John Curtis even introduced the "Prediction Markets Are Gambling Act," a bill that seeks to ban platforms from offering contracts tied to sporting events, proving that in the eyes of some in D.C., betting on sports is only acceptable when it's done through a state lottery or a casino.