Kalshi, a federally regulated prediction market, announced Tuesday that it plans to require users in certain markets to share information about their employers as part of a broader effort to combat insider trading. The company has created a scoring system designed to assess markets based on the risk of insider trading and market manipulation.
Under the new framework, contracts that receive certain risk scores will trigger employment verification requirements for participants. The scoring system evaluates whether markets are related to areas typically covered by insider trading rules, as well as situations where people may have inside information but no legal duty to refrain from trading on it. It also considers a market's importance, its compatibility with existing regulations, and the likelihood that military action or war could be connected to an event resolving the contract.
What the Left Is Saying
Consumer advocates and progressive policy experts largely welcomed the move as a necessary step toward protecting prediction markets from manipulation. They argue that insider trading undermines market integrity and disproportionately harms retail participants who lack access to privileged information.
Senator Elizabeth Warren of Massachusetts has previously called for stricter oversight of financial platforms, arguing that predictive markets require robust safeguards to prevent exploitation by those with special access to non-public data. Groups like Public Citizen have similarly pushed for greater transparency requirements on trading platforms, contending that employment verification represents a reasonable approach to verifying participant identities and deterring bad actors.
Supporters note that Kalshi's framework specifically targets markets where participants might possess material nonpublic information without necessarily violating existing insider trading laws, addressing a potential regulatory gap in current frameworks.
What the Right Is Saying
Free-market advocates and some Republican lawmakers expressed concerns about the new requirements, arguing they could create unnecessary barriers to participation and raise privacy questions. They contend that prediction markets already face significant regulatory oversight as federally regulated platforms.
Senator Thom Tillis of North Carolina has previously voiced skepticism about expanding disclosure requirements on trading platforms, warning against policies that could chill market activity or burden smaller participants. Conservative commentators have argued that Kalshi's approach amounts to overreach, with some questioning whether employment verification will actually prevent sophisticated actors from circumventing the rules using shell companies or third-party accounts.
Industry groups representing financial technology firms argue that existing enforcement mechanisms are sufficient and warn that overly broad identification requirements could drive activity offshore to less regulated platforms. The American Fintech Council has advocated for principles-based regulation rather than prescriptive identity verification mandates.
What the Numbers Show
The new Kalshi framework emerges amid increased regulatory scrutiny of prediction markets following several high-profile incidents. In January, a trader made more than $400,000 in well-timed bets on a U.S. raid to capture Venezuelan President Nicolas Maduro on Polymarket, another major prediction market platform. The Department of Justice subsequently arrested and charged Army soldier Gannon Ken Van Dyke in April with using classified government information for personal gain.
Separately, the DOJ charged Google employee Michele Spagnuolo with insider trading for allegedly using confidential data access to bet $2.7 million on Google's 'Year in Search' list on Polymarket. Prosecutors say he made approximately $1.2 million in profits from those trades. Both incidents highlighted concerns about participants potentially exploiting nonpublic information on prediction markets.
Kalshi is currently the only federally regulated prediction market operating in the United States following a 2023 Commodity Futures Trading Commission ruling, giving its compliance framework particular significance for the industry.
The Bottom Line
Kalshi's employment verification requirement represents one of the most significant anti-insider trading measures implemented by a U.S. prediction market to date. By tying identification requirements to risk-based scoring rather than applying them universally, the company is attempting to balance integrity concerns with maintaining broad market participation.
The approach targets markets where participants might have material nonpublic information without necessarily violating existing insider trading laws—a gap in current regulatory frameworks that Kalshi's system aims to address proactively. The move may set a precedent for how other prediction markets handle similar concerns, particularly as Polymarket continues operating outside direct federal oversight.
Lawmakers on both sides of the aisle are expected to continue monitoring prediction market activity, with potential legislation or additional CFTC rulemaking possible in the coming months.