On March 23, 2026, Kalshi and Polymarket announced new measures aimed at curbing insider trading on their prediction market platforms. The move is intended to align their policies more closely with recent Commodity Futures Trading Commission (CFTC) guidance and emerging legislative proposals.
Polymarket updated its rulebook to clarify its prohibitions against certain trading activity. Under the revised rules, traders may not trade on information where doing so would "violate a preexisting duty or obligation of trust or confidence owed to another person or entity," even if the information is obtained secondhand.[i] The updated rules also expressly prohibit trading on events by those who can influence the outcome of the event.[ii]
Hours after Polymarket's announcement, Kalshi introduced "new technological guardrails" designed to prevent politicians from trading on their own campaigns and athletes from trading on contracts associated with their respective sports leagues. Kalshi cited recent CFTC guidance on prediction market manipulation, as well as "proposed legislation regarding these same issues,"[iii] as the impetus for these changes.
These developments follow CFTC guidance issued earlier this month emphasizing that exchanges must ensure contracts are not "readily susceptible to manipulation" and reiterating that insider trading—defined as the misuse of confidential information in breach of a duty—is prohibited under existing anti-fraud authorities, including CFTC Regulation 180.1.[iv] The CFTC also reiterated its right to prohibit contracts "contrary to the public interest if the contract involves, among other things, assassination, war, or terrorism."[v]
At the same time, Congress has also begun to focus more closely on insider trading in prediction markets. Lawmakers, including Senator Richard Blumenthal (D., Connecticut) and Representative Ritchie Torres (D., New York), have introduced proposals that would bar individuals from participating in prediction markets where they have a conflict of interest or material nonpublic information, such as government officials trading on information obtained through their roles. This growing legislative attention underscores the broader scrutiny of market integrity issues that Kalshi's and Polymarket's recent rule changes appear designed to address.
Taken together, these actions reflect a broader trend toward formalizing market integrity standards in prediction markets. As the industry continues to expand, exchanges appear to be aligning their internal rules and controls with both current regulatory expectations and anticipated legislative requirements, particularly with respect to insider trading and conflicts of interest.
The Investigations and White Collar Defense Group at Venable is actively monitoring developments in the regulation of prediction markets and will continue to provide updates on key litigation, enforcement, and legislative activity.
[i] QCX LLC d/b/a Polymarket US, Market Integrity: Our Rules, Our Standards, Our Commitment, 7.2(g), (h), Polymarket US (Mar. 20, 2026), https://polymarketexchange.com/market-integrity.html
[ii] Id. at 7.2(i)
[iii] Bobby DeNault, New Guardrails to Prevent Insider Trading and Manipulation in Politics and Sports, Kalshi (Mar. 23, 2026), https://news.kalshi.com/p/kalshi-new-guardrails-insider-trading-politics-sports
[iv] U.S. Commodity Futures Trading Comm'n, Div. of Mkt. Oversight, CFTC Staff Advisory No. 26-08: Prediction Markets Advisory, at 3 (Mar. 12, 2026), https://www.cftc.gov/csl/26-08/download
[v] Id. at 2