The leading prediction market, Polymarket, continues to declare its stance on insider trading, taking action against startups and builders that are suspected of directing volume to its platform based on copytrading of suspected insider information.
Both leaders in the booming prediction market sector, Polymarket and Kalshi, are expected to continue to attack insider trading, as both platforms recognize how high the stakes have become.
No more insider trading debate on Polymarket
Does insider trading make markets better reflect real-life odds?
Polymarket’s recent moves are signaling its stance on the matter. The platform has reportedly updated its market integrity rules to eliminate insider trading and market manipulation, not just on its DeFi end, but also on its exchange.
The new terms make it a violation of trust to trade on confidential information, especially those that violate a duty of trust. That means no tipping off friends with non-public info and not allowing elected officials or government insiders to bet on events they are capable of influencing.
Any found in violation will face wallet bans, be referred to law enforcement, fines, suspensions, or even outright termination. Neal Kumar, Polymarket’s CLO, said while discussing the matter: “Markets thrive on clarity. These enhancements make expectations abundantly clear for every participant.”
Why Polymarket is drawing a bright red line now
The timing of all these announcements raises eyebrows as Polymarket has drawn unwanted attention because it, and even Kalshi at some point, faced criticism due to suspiciously timed trades.
For example, at the beginning of the year, somebody spent $32,000 on Polymarket betting on Venezuela’s Maduro getting ousted just hours before US forces moved. They walked away with over $400,000 in the process. Such acute maneuvering was enough to make people suspect insider trading.
There is also heat coming from Capitol Hill regarding the topic. Congressman Ritchie Torres is sponsoring the Public Integrity in Financial Prediction Markets Act of 2026, and it already has over 40 Democratic co-sponsors with the aim of making it illegal to trade based on material non-public government information.
Polymarket is not only drawing a line, but it is also switching from passivity on the topic to aggressive enforcement. It is cracking down as well on startups and builders that have been leveraging its liquidity and data to promote copytrading based on suspected insider edge.
The stakes are at their highest after Kalshi’s Masters masterclass
While Polymarket was busy rewriting its playbook, its rival Kalshi was busy showing off new achievements that make it easy to understand why every platform is suddenly trying to stay on the good side of regulation.
On Tuesday, Kalshi took to X with a tweet boasting about its “Masters crushing records.” The post came attached with an image that really put the feat into perspective.
It revealed there had been half a billion dollars in trading volume on the prestigious golf tournament hosted every year in Augusta, Gerogia across player props, winner markets and side bets. It attracted all manner of degens from retail players to hedge fund junkies, making the weekend an unforgettable one of speculation.
It is not Kalshi’s first time posting such gains. Its Super Bowl volume was already nothing to sneeze at, but this Masters aachievements ends a clear message; prediction markets are here to stay.
They now command more attention and political clout, contributing to heightened scrutiny, especially regarding things like insider trading.
Kalshi has always tried to tow the line of integrity; it is famous for suspending a MrBeast video editor for trading on non-public information, fining and banning a California gubernatorial candidate for betting on his own race. It even refused to pay out a market linked to the demise of Iran’s Supreme Leader, choosing instead to return fees and settle at the last traded price.
Now that Polymarket is also on board with the effort, insider trading is sure to reduce, or so the experts theorize.
