NEW YORK – Kalshi, a platform dedicated to prediction markets, has announced plans to gather employment data from users involved in specific markets facing increased risks of insider trading activities.
This decision, revealed on Tuesday, comes in the wake of several incidents where traders exploited insider knowledge for financial gain on platforms such as Kalshi and Polymarket. Notably, former Congressman George Santos is currently under investigation for allegedly placing a bet on his non-attendance at President Donald Trump’s State of the Union address, despite initially committing to attend. Similarly, in April, a U.S. Army soldier faced charges for leveraging classified information to secure a $400,000 profit on Polymarket, by betting on the timing of U.S. military operations in Venezuela earlier this year.
To counteract such malpractices, Kalshi intends to assign a risk score to markets it deems vulnerable to insider trading or manipulation. Users wishing to engage in high-risk markets will need to disclose their employment details. Kalshi plans to prohibit individuals identified as potential insider traders from participating in these markets.
“With these new integrity measures, we are setting a benchmark for maintaining market integrity within federally regulated prediction markets,” stated Robert DeNault, Kalshi’s head of enforcement, in a formal announcement.
The company emphasized that any employment information collected will only be utilized if there are indications of unusual trading activities within the market in question.
“This lets us identify presumptive insiders – people who have material, nonpublic information about a market’s outcome – and screen them out before a trade is ever placed,” Kalshi said in a statement.
Prediction markets have been pushing hard to gain legitimacy among the public and policymakers as a legitimate platform where users can bet on everything from sports to the weather to elections. Kalshi, in particular, has been trying to differentiate itself from its major competitor Polymarket, whose primary operations are outside of U.S. jurisdiction. Kalshi also disclosed that it has made at least 20 referrals to law enforcement or securities regulators for market manipulation or insider trading.
Kalshi announced in February that it was creating an Independent Surveillance Audit Committee to help it combat market manipulation and insider trading. The changes announced this week resulted partly from the committee’s work, the company said.
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