People hoping to place certain bets on Kalshi, the prediction market operator, will soon have to disclose where they work – a move the company says is designed to stop insider trading after a series of scandals.
The platform, which lets users wager on everything from elections to sporting events, said on Tuesday that it would begin collecting employment information from users attempting to place bets that could benefit from inside knowledge. The new rule will apply to “markets with heightened insider or manipulation risk”, the company said, citing as an example a possible trade on whether OpenAI or Anthropic will go public first.
“Kalshi will require users to reveal where they work to bet on high-risk markets after insider trading scandals.”
The crackdown follows growing concerns about insider trading on prediction markets as their popularity surges. Former congressman George Santos is currently being investigated for alleged insider trading on Kalshi, according to NPR. Earlier this year, Kalshi disclosed that it had discovered candidates for Congress from Minnesota, Texas, and Virginia betting on their own races.
In the first quarter of this year, Kalshi said it made more than 20 referrals to law enforcement of potentially illegal trading activity after opening more than 150 of its own investigations. The problem is not limited to Kalshi: last month, a Google employee was charged with insider trading for 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 the platform regarding the removal operation of Venezuelan president Nicolás Maduro. He has pleaded not guilty.
By requiring more information about users’ employers, Kalshi said it will be able to “identify presumptive insiders … and screen them out before a trade is ever placed”. The company said it would use a risk scoring method to identify markets that appear more at risk of 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 company said.
Prediction markets like Kalshi have grown dramatically in popularity over the last few years, particularly in the US, where they are regulated as trading, allowing them to operate in all 50 states despite restrictions on gambling. By allowing millions of people to collectively wager billions of dollars on the outcome of seemingly any public event, the platforms have come under scrutiny for insider trading as well as gamifying serious issues like military action. Earlier this year, the White House warned staff not to use insider information to place bets on prediction markets, following reports of suspiciously timed trades in the run-up to the US-Israel war with Iran.