Kalshi, the federally regulated prediction market, is tightening its rules by requiring some users to disclose their employers as part of a broader effort to curb insider trading. The company announced Tuesday it has developed a proprietary scoring system to evaluate markets based on their vulnerability to manipulation and insider activity.
Markets that receive a certain risk score will trigger mandatory employment verification for participants. The system will assess whether a market touches on areas typically covered by insider trading laws, as well as those where individuals might hold non-public information without a legal obligation to refrain from trading.
Kalshi's new framework also weighs a market's significance, its regulatory compatibility, and the likelihood that war or military action could influence its outcome. "By implementing these new integrity measures, we continue to lead the industry on the issue of market integrity amongst federally regulated prediction markets," said Robert DeNault, Kalshi's head of enforcement, in a statement.
The move comes as prediction platforms like Kalshi and Polymarket face increasing scrutiny from Washington. Lawmakers have repeatedly raised alarms about suspicious trading patterns, and the Department of Justice has pursued criminal charges in several insider trading cases tied to these markets.
In January, a trader on Polymarket made over $400,000 from a series of well-timed bets on the U.S. raid to capture Venezuelan President Nicolás Maduro. The DOJ later arrested and charged U.S. Army soldier Gannon Ken Van Dyke in April with using classified government information for personal gain. Polymarket touted the arrest as "proof the system works," citing its updated market integrity rules.
More recently, the DOJ charged Google employee Michele Spagnuolo with insider trading for allegedly using confidential data to place $2.7 million in bets on Polymarket regarding Google's "Year in Search" list. Prosecutors say the 36-year-old software engineer netted about $1.2 million in profits.
These cases underscore the growing tension between innovation in prediction markets and the need for safeguards. Kalshi's new employer verification requirement is its latest attempt to preempt further regulatory backlash and demonstrate its commitment to market integrity.
Political analysts note that the crackdown could have broader implications for how prediction markets operate, especially as they intersect with sensitive areas like defense and international affairs. The system's scoring of military-related events, for instance, signals heightened vigilance around national security information.
Kalshi's move is part of a wider trend among regulated platforms to bolster compliance measures. As Congress continues to debate the role of prediction markets in U.S. elections and policy, firms like Kalshi are racing to build trust with regulators and the public.
