People hoping to bet on certain events on the prediction market platform Kalshi will soon have to disclose where they work, as the company attempts to stamp out a growing insider trading problem.
The firm, which allows users to wager against each other on elections, sports and culture, announced on Tuesday that it will begin collecting employment information from users trying to place bets that could benefit from non-public knowledge. The rule will apply to “markets with heightened insider or manipulation risk”, Kalshi said, giving the example of a hypothetical trade on whether OpenAI or Anthropic will go public first.
“Prediction market Kalshi will require users to reveal their employer for certain bets to combat insider trading.”
The move comes as prediction markets face intensifying scrutiny over insider trading. Former US congressman George Santos is currently being investigated for alleged insider trading on Kalshi, according to NPR. Earlier this year, the platform said it had discovered congressional candidates from Minnesota, Texas and Virginia betting on their own races.
In the first quarter of this year alone, Kalshi said it opened more than 150 internal investigations and made over 20 referrals to law enforcement regarding potentially illegal trading activity.
The problem is not confined to Kalshi. Last month, a Google employee was charged with insider trading after using company information to place bets on Polymarket, a rival platform. And earlier this year, a US special forces soldier was found to have allegedly made successful bets on Polymarket concerning the removal operation of Venezuelan President Nicolás Maduro. He has pleaded not guilty.
By requiring more user information, Kalshi said it will be able to “identify presumptive insiders … and screen them out before a trade is ever placed”. The company also plans to use a risk scoring method to identify markets that appear more vulnerable to manipulation or insider trading, such as those on national security matters. “By running an assessment on the national security risk a market might present before we list it, we can better prevent dangerous events from having a negative effect on our markets – or vice versa,” the firm said.
Prediction markets like Kalshi have surged in popularity over the past few years, particularly in the US, where they are regulated as trading and can operate in all 50 states despite restrictions on gambling. But the platforms have faced growing criticism for gamifying serious issues like military action and for enabling insider trading. Earlier this year, the White House warned staff not to use non-public information to place bets on prediction markets, following reports of suspiciously timed wagers ahead of the US-Israel conflict with Iran.