Prediction Market Operators Tighten Insider Trading Controls
Prediction market operators Kalshi and Polymarket have introduced new restrictions to prevent insider trading. The two companies have updated their restrictions as the market grows and the need to address insider trading grows.
Kalshi detailed new technological controls designed to prevent politicians, athletes, and other relevant participants from trading in markets tied to events they could influence. The company stated that its systems are intended to identify and block political candidates before they attempt to place trades related to their own campaigns.
Additional safeguards now extend to participants in college and professional sports, aiming to reduce the risks associated with insider knowledge in event-based contracts. Kalshi acknowledged that screening systems are not fully foolproof and said some actors may still attempt to bypass restrictions.
To address this problem, the company incorporated a whistleblower function into its platform. This would allow users to report suspicious activity in real time based on publicly available information.
In a separate statement, Polymarket also announced that it had amended its own market rules to outline three types of prohibited activities. This includes trading on stolen confidential information, engaging in illegal tips, and those who have a direct impact on results.
Both policy changes highlight the need for prediction market apps to adhere to regulations similar to those of financial and betting markets. Those concerns were amplified when Sens. Adam Schiff and John Curtis presented a plan on Monday to stop prediction platforms from offering sports-related and casino-style markets.
Funding surge and market growth accelerate scrutiny
As scrutiny of prediction markets intensifies, Kalshi continues to grow rapidly. The firm secured over $1 billion in new funding, which took its valuation to $22 billion. The funding round was led by Coatue Management, which doubled Kalshi’s valuation from $11 billion in December 2025.
That increase followed a sharp upward trend throughout 2025. Kalshi had been valued at $2 billion in June after raising $185 million, before climbing to $5 billion in October and then $11 billion by year-end. The latest figure places the company ahead of Flutter Entertainment, which currently holds a market capitalization of about $18.9 billion.
Kalshi’s financial metrics show similar momentum. The company is expected to generate about $1.5 billion in annual revenue. Kalshi earned about $263.5 million in 2025, but it has already surpassed that figure this year. The revenue for March is expected to exceed $150 million, driven by activity during March Madness.
However, the funding also closed on the same day Nevada issued a temporary restraining order banning Kalshi’s sports, entertainment, and election markets. This demonstrates that, despite ongoing growth, prediction market operators are facing continued scrutiny from state regulators and lawmakers.
