Kalshi and Polymarket rolled out new anti-insider trading policies on Monday, the same day a bipartisan Senate bill was introduced to ban sports betting on prediction market platforms.
The two leading prediction markets unveiled measures to prevent insider trading, while Sens. John Curtis (R-Utah) and Adam Schiff (D-Calif.) filed legislation that would prohibit any entity registered with the Commodity Futures Trading Commission from listing or facilitating transactions linked to sporting events, athletic competitions, or casino-style games such as poker and blackjack.
According to the New York Post, the moves come as these platforms face mounting scrutiny over controversial wagers tied to geopolitical events. Arizona's attorney general filed criminal charges against Kalshi last week, accusing it of operating an illegal gambling business. Last Thursday, Major League Baseball announced a partnership with Polymarket and the CFTC to establish guidelines aimed at managing risk while enhancing fan engagement.
Kalshi said its new guardrails will "aim to preemptively block political candidates if they try to trade on their own campaigns." The updated rules will also bar college and professional athletes from betting in "markets associated with sports they are involved in." The company also said its guidelines prohibited markets "directly tied to death." "We are committed to banning people who try to cheat," Kalshi stated. "Ensuring market integrity is not just a goal – it is a cornerstone of our business model."
Polymarket's chief legal officer, Neal Kumar, echoed that sentiment. "Markets thrive on clarity," Kumar said in a statement. "These rule enhancements make our expectations abundantly clear for every participant across both platforms and highlight the compliance infrastructure we have already built."
The bipartisan bill from Curtis and Schiff would effectively strip prediction markets of the ability to offer any contract tied to sports outcomes. Sen. Schiff took direct aim at industry terminology, calling the products exactly what he believes they are.
"Sports prediction contracts are sports bets — just with a different name," Schiff said. "And yet, these contracts have been offered in all fifty states in clear violation of state and federal law." Schiff went further, accusing federal regulators of enabling the problem. "Rather than enforcing the law, the CFTC is greenlighting these markets and even promoting their growth. It's time for Congress to step in."
Sen. Curtis framed his support for the bill around youth protection and state sovereignty. "Too many young people in Utah are getting exposed to addictive sports betting and casino-style gaming contracts that belong under state control, not under federal regulators," Curtis said.
The issue has sparked a broader debate about where prediction markets end, and gambling begins — and who should have the authority to draw that line. Critics of the bill, including Kalshi itself, argue the legislation would do more harm than good by driving activity to unregulated offshore platforms.
Kalshi spokesperson Elisabeth Diana pushed back sharply. "Banning sports on regulated prediction markets would just push this behavior offshore, where no regulation exists," Diana told The Post. "It's clear this bill is motivated by casino interests that are threatened by competition."
The timing of the new policies is notable given recent controversies. Earlier this month, Kalshi refused to pay out wagers that accurately predicted the February death of Iranian Supreme Leader Ayatollah Ali Khamenei. Anonymous Polymarket traders reportedly made hundreds of thousands of dollars correctly predicting the January fall of Venezuela's President Nicolás Maduro.
Most recently, Polymarket bettors allegedly made death threats to an Israeli reporter. Meanwhile, trading volumes on prediction markets have surged — according to industry estimates, volumes exceeded $1.2 billion during this year's Super Bowl, surpassing $4.5 billion for the week. Kalshi rejected the criminal charges from Arizona as based on "paper-thin arguments," adding that "states like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it."
From a free-market perspective, the core tension here is clear. Prediction markets represent genuine price discovery — they aggregate information in ways polls and pundits cannot. The question is whether Congress should be picking winners between regulated prediction platforms and entrenched casino and sportsbook interests.
If these platforms are forced out of sports markets entirely, history suggests the demand will not vanish — it will simply migrate offshore. Investors and market participants should watch this legislation closely, as the outcome could reshape the regulatory landscape for event-driven contracts and potentially create openings — or closures — across the broader fintech space.