Kalshi and Polymarket Strengthen Insider Trading Bans as U.S. Lawmakers Move to Restrict Sports Event Contracts

Prediction market platforms Kalshi and Polymarket announced new trading restrictions on March 23, 2026, addressing insider trading concerns on the same day that a bipartisan group of U.S. lawmakers introduced legislation to ban event contracts resembling sports betting or casino-style games.

Kalshi’s updated rules prohibit political candidates from trading on their own campaigns and ban individuals involved in college and professional sports—including athletes, personnel, and referees—from trading on related contracts. Polymarket simultaneously released enhanced market integrity rules across its decentralized finance platform and CFTC-regulated U.S. exchange, banning trading on stolen confidential information, illegal tips, and trading by individuals who can influence the outcome of an event. The moves come amid mounting scrutiny over well-timed bets that preceded U.S. and Israeli strikes on Iran and a U.S. military operation targeting Venezuelan President Nicolás Maduro.

Kalshi’s Updated Trading Restrictions

Scope of Bans

Kalshi announced that it will preemptively ban:

Political candidates: Prohibited from trading on their own campaigns

Sports participants: Individuals involved in college and professional sports, including athletes, personnel, and referees, banned from trading on related contracts

The company stated that the ban has “been in the works for months” and was designed to proactively address regulatory guidance and legislation introduced in Congress involving insider trading and market manipulation on prediction markets.

Legal Context

Kalshi’s announcement follows the platform’s ongoing legal battles with multiple states asserting that sports event contracts constitute gambling requiring state licenses. The platform has argued that its contracts fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC).

Polymarket’s Enhanced Market Integrity Rules

Prohibited Conduct

Polymarket released updated rules across its DeFi platform and CFTC-regulated U.S. exchange, clarifying three core categories of prohibited insider trading conduct:

Trading on stolen confidential information: Participants may not trade on any contract if they possess confidential information about the outcome or likely outcome of the underlying event, where using that information would violate a preexisting duty or obligation of trust or confidence

Trading on illegal tips: Participants may not trade on confidential information passed to them by someone who owed a preexisting duty of trust or confidence to someone else, if they know or have reason to know that the source would be prohibited from trading

Trading by those who can influence the outcome: Participants may not trade on any contract if they hold a position of authority or influence sufficient to affect the outcome of the underlying event

Surveillance and Enforcement

Polymarket maintains a multi-layered monitoring system on its DeFi platform, with all trades executed on the Polygon blockchain providing built-in transparency. When unusual activity is identified, the platform may initiate review and pursue disciplinary action, including banning wallet addresses and referring users to law enforcement.

On Polymarket US, surveillance operates at three levels: partnerships with trade surveillance specialists, a control desk conducting real-time surveillance, and a Regulatory Services Agreement with the National Futures Association (NFA) to conduct trade practice surveillance and investigate potential rule violations.

Legislative Context: Prediction Markets Are Gambling Act

Bipartisan Bill Introduction

On March 23, Democratic Senator Adam Schiff and Republican Senator John Curtis introduced the Prediction Markets Are Gambling Act, which would ban CFTC-registered entities from listing event contracts that resemble “a sports bet or a casino-style game”. The bill aims to clarify regulatory jurisdiction, ensuring states maintain authority over sports betting and casino gaming.

Legislative Statements

Schiff stated: “Sports prediction contracts are sports bets — just with a different name. These contracts have been offered in all fifty states in clear violation of state and federal law.” Curtis added that the legislation “clarifies regulatory jurisdiction, ensuring that states can maintain their authority over sports betting and casino gaming.”

Industry Response

Tarek Mansour, CEO of Kalshi, responded on X, calling the bill the “casino lobby hard at work” and stating: “This bill isn’t about protecting consumers; it’s about protecting monopolies.”

Background: Insider Trading Concerns

The rule updates follow recent incidents that raised concerns about potential insider trading on prediction platforms:

Iran strike bets: Polymarket users reportedly profited from well-timed bets before U.S. and Israeli strikes on Iran, with observers noting trades were made at market price across multiple accounts in an apparent attempt to obfuscate identity

Maduro operation: Similar concerns arose regarding a U.S. military operation targeting Venezuelan President Nicolás Maduro

Ben Yorke, a former research analyst, told The Guardian that the Iran strike bets were made by “someone with some degree of inside info.”

Frequently Asked Questions

What new restrictions did Kalshi and Polymarket announce?

Kalshi announced it will ban political candidates from trading on their own campaigns and ban individuals involved in college and professional sports from trading on related contracts. Polymarket released enhanced market integrity rules prohibiting trading on stolen confidential information, illegal tips, and trading by individuals who can influence event outcomes.

Why did the platforms implement these rules now?

The rule updates come amid mounting scrutiny over potential insider trading on prediction markets, including well-timed bets that preceded U.S. and Israeli strikes on Iran and a U.S. military operation in Venezuela. The announcements also coincide with the introduction of bipartisan legislation in Congress that would ban sports event contracts.

What is the Prediction Markets Are Gambling Act?

The bipartisan bill introduced by Senators Adam Schiff and John Curtis would prohibit CFTC-registered entities from listing event contracts that resemble sports betting or casino-style games. The legislation aims to clarify that states maintain authority over sports betting and casino gaming, rather than federal regulators.