Kalshi Rolls Out Preemptive Checks to Block Athletes and Politicians From Insider Trading

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Kalshi Rolls Out Preemptive Checks to Block Athletes and Politicians From Insider Trading

Key Highlights

  • Kalshi is deploying new technological guardrails to preemptively block political candidates & athletes from trading on their own campaigns & sports they are involved in.
  • The platform is also adding a whistleblower functionality directly to its market pages, allowing users to flag potential violations as they review public trading data.
  • Polymarket also instituted its own set of bans to prohibit users from trading on contracts where they might possess confidential information or could influence the outcome of an event.

Kalshi, the biggest prediction market in the U.S., has significantly strengthened its rules against insider trading and market manipulation. They’ve implemented new technology to automatically prevent people like politicians and athletes – those with access to privileged information or the power to affect outcomes – from trading on relevant markets.

Kalshi recently announced two new ways to monitor activity – including a feature for whistleblowers – in a blog post. This move suggests the company is proactively addressing a rapidly changing and increasingly strict regulatory landscape.

As an analyst, I see a clear connection here. The release of these new guidelines happened on the very same day that Senators Schiff and Curtis proposed a bipartisan bill – the Prediction Markets Are Gambling Act. This act would effectively prohibit certain prediction market exchanges, specifically those regulated by the CFTC, from offering contracts related to sports or casino games. It’s a significant move, and the timing feels deliberate.

From Reactive to Preemptive

As an analyst, I’ve been following Kalshi’s recent steps to address potential insider trading. They’re focusing on two main areas: individuals with knowledge of political events, and those directly involved in sporting competitions. Essentially, they’re tightening controls around people who might have unfair advantages based on non-public information in those markets.

Kalshi, the platform, has introduced new tools to prevent political candidates from trading based on the performance of their own campaigns. While Kalshi has always prohibited this type of trading – and already blocks trades from current elected officials like members of Congress – the new system now proactively stops candidates from making these trades before they even happen.

Kalshi explained that a recent incident prompted their new rules. Former California gubernatorial candidate Kyle Langford bet around $200 on himself winning the election and publicly shared this on social media. As a result, Kalshi banned him from the platform for five years and fined him ten times the amount of his bet.

As an analyst, I’m following Kalshi’s new policy regarding sports trading. Essentially, they’re proactively blocking anyone directly involved in a sport – players, coaches, referees, and so on – from trading on Kalshi markets related to that specific sport. This is a preventative measure to ensure fair and unbiased trading.

Trading on these events was always prohibited, but previously, suspicious activity was only investigated *after* it happened. Now, thanks to months of work with the sports integrity firm IC360, we’ve created lists of known athletes, officials, and employees who will be automatically blocked from making trades. This means we can prevent potentially problematic trades from happening in the first place, covering both college and professional sports.

Kalshi’s head of enforcement, Robert DeNault, explained to Axios that the company can more effectively prevent illegal activity by banning potential offenders *before* it happens. He acknowledged that completely eliminating all illicit activity is unrealistic, but emphasized that striving for improvement is still important. “We shouldn’t let the desire for perfection prevent us from making things better,” DeNault stated.

The platform is introducing a way for users to report possible wrongdoing directly on market pages. This feature lets the community highlight potential violations they spot while looking at trading information, recognizing that no automated system can catch everything malicious actors attempt.

Polymarket Rewrites Its Integrity Rules on the Same Day

Kalshi wasn’t the only platform taking steps to strengthen its safeguards. At the same time, Polymarket implemented wider-ranging bans, updating its rules to explicitly prohibit users from trading on events where they might have inside knowledge or the ability to affect the result. This ban isn’t limited to athletes; it also applies to company executives, government officials, or anyone else who could potentially influence an event or gain access to non-public information.

Polymarket has updated its rules to strengthen market fairness and specifically address insider trading. These new rules clearly define three prohibited activities: trading with illegally obtained information, using stolen or private data for trades, and trading by people who have the power to affect market results. Polymarket has also created dedicated Market Integrity pages where users can learn more about these rules and report anything that seems suspicious.

The fact that both announcements were made on the same day as the Schiff-Curtis bill highlights how quickly the industry needs to act. These platforms are trying to show they can regulate themselves before Congress passes laws that could drastically change how they operate.

Why Self-Regulation May Not Be Enough

Okay, so the new rules are trying to tackle things like illegal trading and market manipulation, which is good. But they don’t fix the bigger issue: whether crypto prediction markets are considered gambling or something else. This disagreement is really putting us at odds with regulators. In fact, there’s a new bill being proposed that could be devastating for platforms like Kalshi and Polymarket. It basically says they can’t offer contracts on sports at all! And since sports make up the vast majority – like 90% – of the trading volume on those sites, it could seriously cripple their business if it passes.

Kalshi claims its recent changes are a direct response to concerns about preventing insider trading, referencing guidance from regulators and proposed legislation. However, the proposed bill actually aims to completely prohibit sports-related contracts from being traded on prediction markets, even if those markets are well-regulated. Kalshi’s new rules focus on punishing wrongdoing within the market, but they don’t address the larger issue of whether such markets should exist at all.

A Pattern of Enforcement Actions

Kalshi is strengthening its efforts to show regulators it takes compliance seriously. Recently, on February 25th, the company revealed it had reported two instances of potential insider trading to the CFTC. These involved trading related to the Langford candidacy and activity by a YouTube editor for MrBeast, who used confidential information about upcoming content.

The news about athlete screening comes after Milwaukee Bucks player Giannis Antetokounmpo invested in Kalshi. This investment, made about six weeks ago, raised worries that athletes might bet on events they could directly affect.

Kalshi first revealed its collaboration with IC360, a company specializing in compliance for sports betting and gaming, back in March 2025. Since then, they’ve been developing the screening tools and technology infrastructure that were announced today.

The Regulatory Pressure Driving the Response

Things are getting really intense for prediction markets right now, and it’s starting to worry me as an investor. It feels like regulators are coming down hard – I’m seeing a lot of legal battles pop up. Just recently, Nevada got a temporary restraining order against Kalshi, and Arizona is actually pursuing criminal charges against their parent companies. Plus, Massachusetts and Michigan are suing them, and I’ve heard at least eleven states have sent cease-and-desist letters, basically telling these companies to stop operating. It’s a lot of action, and it definitely makes you think twice about investing in this space right now.

In 2026, lawmakers at the federal level proposed at least seven different bills related to prediction markets. These bills address a wide range of issues, including prohibiting bets on sports contracts (as seen in proposals from Schiff-Curtis, Moore-Carbajal, and Titus), banning wagers on war or death (covered by the DEATH BETS Act and BETS OFF Act), and restricting insider trading by federal employees (as outlined in bills from Klobuchar-Merkley and Torres).

Kalshi emphasized that maintaining a fair and honest market is essential to their business, and they are committed to ongoing improvements to protect users. However, it’s still unclear whether these efforts will be enough to satisfy regulators who question whether these platforms align with existing gambling laws. This remains the biggest challenge for the prediction market industry going forward.

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2026-03-24 10:00