Prediction market platforms are moving to toughen trading rules to prevent insider trading and market manipulation, including blocking politicians and athletes from participating in their own markets.

On March 23, IT outlets Engadget and The Verge reported that major global prediction markets Kalshi and Polymarket each announced plans to introduce advanced surveillance systems and revise operating rules to prevent illicit gains using non-public information. The moves are aimed at responding preemptively to guidance from the U.S. Commodity Futures Trading Commission calling for greater transparency in prediction markets and to efforts in the U.S. Congress to enact legislation to prevent insider trading.

Kalshi: It will block trading in politics and sports and launch real-time monitoring Kalshi introduced new safeguards to preemptively block political candidates and sports figures from trading in markets directly related to them. Under the measure, political candidates cannot bet on the outcome of their own election campaigns. Professional and college athletes, referees and team management, among others, are also banned from trading on the outcome of games in sports in which they participate or are involved.

Kalshi built a system using cutting-edge technology and detailed screening lists, but it also prepared additional measures in light of malicious actors repeatedly seeking workarounds. It will add a whistleblower function directly to market pages to encourage community members to monitor public real-time trading data, identify potential violations and report them immediately.

Polymarket: It will specify insider trading rules and impose strong financial sanctions for violations Polymarket also substantially updated its market integrity rules in response to recent suspicious betting cases. It clarified its enforcement stance after allegations of using inside information in markets tied to sensitive matters, including whether Venezuelan President Nicolas Maduro would be arrested or the launch of OpenAI's new product. Polymarket said the prohibited conduct it set out falls into three main categories.

First, users cannot participate in trades using stolen confidential information or non-public knowledge that the general public cannot access. Second, trading using illegal tips passed on by others with access to confidential information is also strictly prohibited. Third, market participation by individuals with authority or influence that could materially affect the outcome of the event is also subject to being blocked.

Polymarket will conduct detailed reviews of wallet addresses suspected of violating rules and, if necessary, permanently block those addresses or refer the matter to investigative authorities. It also plans to impose strong financial penalties for violations.

Ultimately, the measures are seen as a survival strategy for prediction markets to evolve beyond simple betting sites into trustworthy information analysis platforms. If they fail to root out insider trading when non-public information is directly linked to asset values, trust in the collective intelligence that underpins the market is bound to collapse. Blocking increasingly sophisticated illicit trades in real time and building a track record of strong punishments will be a key factor determining the market's future success.