Prediction market platforms Kalshi and Polymarket are rolling out new measures to curb insider trading and market manipulation, as regulatory pressure from Capitol Hill intensifies.

In a blog post published Monday, Kalshi said it has introduced new screening tools to block political candidates from trading on their own elections, expanding existing restrictions that already apply to elected officials. 

The platform is also implementing a new policy targeting sports-related markets, using screening lists developed with integrity monitoring firm IC360 to prevent athletes, coaches, referees, and other insiders from trading on events they are involved in.

While such activity is already prohibited, Kalshi said enforcement had largely been reactive, requiring investigations after trades were placed. Kalshi also added a whistleblower feature embedded directly into its trading interface, allowing users to report suspicious activity more easily. 

Bobby DeNault, Kalshi's enforcement and legal counsel, said these measures have been in development for months to "proactively address" guidance from the Commodity Futures Trading Commission and Congressional proposals to prevent insider trading.

Meanwhile, Polymarket said Monday that it has updated its governing documents across both its decentralized platform and its CFTC-regulated U.S. exchange, introducing clearer rules around insider trading and enforcement.

Specifically, Polymarket outlined three main categories of prohibited conduct: trading on stolen confidential information, trading on illegal tips, and trading by individuals who can directly influence an event's outcome. It also expanded restrictions on broader forms of market abuse, including spoofing, wash trading, and front-running. 

"These rule enhancements make our expectations abundantly clear for every participant across both platforms and highlight the compliance infrastructure we have already built," said Neal Kumar, chief legal officer of Polymarket. 

According to the Monday statement, Polymarket uses multi-layered surveillance across its DeFi and U.S. platforms, combining on-chain transparency and third-party monitoring to detect violations.

Growing scrutiny

The updates reflect a broader industry push to align more closely with traditional financial market standards, as lawmakers raised concerns that prediction markets — particularly those tied to politics and sports — could be vulnerable to manipulation.

On Monday, U.S. senators Adam Schiff and John Curtis introduced the "Prediction Markets Are Gambling Act," seeking to bar prediction contracts tied to sports or casino-style games from being listed or traded on a registered platform.

The bill covers a wide range of products, including contracts linked to professional and college sports, as well as casino-style games such as slots, blackjack, roulette, and bingo. It also specifies that it would not preempt state laws governing gambling or related contracts, reinforcing state authority alongside the proposed federal restrictions.

Similar legislative efforts around prediction markets have emerged recently, including the Death Bets Act, which seeks to ban event contracts tied to war or an individual's death.

Earlier this month, the CFTC also issued guidance on prediction market contracts that highlighted risks in contracts involving player injuries, misconduct, or other specific sports outcomes, which could incentivize participants to influence results.

Kalshi and Polymarket remain the dominant prediction market platforms, with Kalshi recording about $10.44 billion in monthly volume in February, compared with Polymarket's $7.94 billion, according to The Block's data dashboard.