Polymarket Publishes ‘Enhanced’ Integrity Rules as Political Pressure Mounts on Prediction Markets Over ‘Insider Trading’

Prediction markets are quickly becoming the most popular destination for anyone seeking to wager money on everything from sports to election outcomes to geopolitical events. As the firms operating the markets rapidly expand, regulators and lawmakers are now trying to catch up, leading one company to publish new market integrity rules amid new scrutiny by federal and state governments. The two largest prediction markets in the United States, Kalshi and Polymarket, were heralded as more accurate forecasters of the 2024 election compared to traditional polling. In the wake of their successes that year, both firms brought on the president’s son, Donald Trump Jr., as an advisor or investor and began launching new partnerships with traditional news outlets. Combined, the two firms are valued at more than $40 billion. Lawmakers’ concerns about these prediction markets have only grown more intense in the last few months, as some traders made significant sums of money by betting on questions related to President Maduro’s capture in Venezuela and the American strikes on Iran. As state and federal officials are questioning these platforms, Polymarket on Monday published a new set of “market integrity” rules to explain “what’s prohibited, how we enforce rules, and how to report suspicious activity.”With these new rules published, Polymarket is making the case to the public that they are cracking down on potential insider trading activity. The firm says it will not allow individuals with confidential information to place bets on the outcomes of certain events if using that information “would violate a preexisting duty or obligation of trust or confidence owed to another person or entity.” Individuals are also not able to use confidential information passed on by someone else who originally received that information. Polymarket also says that individuals in positions of authority will not be allowed to enter into event contracts if they themselves have the power to shape the outcomes of those events. “When Polymarket or the community identifies unusual or potentially questionable trading activity, Polymarket may initiate a review and pursue disciplinary action, including banning wallet addresses and referring the user and matter to law enforcement,” the company said Monday. The renewed commitment to cracking down on potential insider trading on their platform comes after members of Congress have been raising concerns about suspicious trades in the lead-up to critical national security events. Congressman Mike Levin and Senator Adam Schiff have introduced legislation to ban prediction markets related to war and death, citing a suspicious trade less than 90 minutes before President Trump announced America was attacking Iran. “It appears that a Polymarket account called ‘Magamyman’ made $515,000 in a single day betting on last night’s U.S. strike on Iran, with the first trade placed 71 minutes before the news broke publicly,” Mr. Levin wrote in an X post the same day Mr. Trump announced the strikes. “When this person bought in, the market had this at a 17 percent probability. They turned roughly $87,000 into over half a million dollars overnight.”On Sunday, some observers noticed what they described as “suspicious” new wallets on Polymarket which had placed more than $150,000 worth of bets on the question of whether or not there would be a cease-fire between the United States and Iran by the end of March. Those wallets had almost no history of placing bets on the platform, with a potential payout on these bets being more than $1,000,000. Kalshi, too, is in the sights for some members of Congress. On Monday, Mr. Schiff and a Republican colleague from Utah, Senator John Curtis, announced they were introducing legislation to ban sports betting on prediction markets altogether. “Too many young people in Utah are getting exposed to addictive sports betting and casino-style gaming contracts that belong under state control, not under federal regulators,” Mr. Curtis said in a statement to the Wall Street Journal, which first reported the new legislation. In a statement to the New York Sun, a spokeswoman for Kalshi said the bill from Messrs. Schiff and Curtis is nothing more than an attempt to protect casino monopolies. “Banning sports on regulated prediction markets would just push this behavior offshore, where no regulation exists. It’s clear this bill is motivated by casino interests that are threatened by competition,” she tells the Sun. “Sports trading on regulated prediction markets offer a fairer choice to consumers, with no house that restricts winners and hooks people the more they lose.”“We should let competition run its course instead of protecting monopolies,” she argued. At the state level, Kalshi is now facing a criminal complaint from the attorney general of Arizona, Kris Mayes, who accused the platform of running an illegal sports betting operation in her state without approval from regulators. “Kalshi may brand itself as a ‘prediction market,’ but what it’s actually doing is running an illegal gambling operation and taking bets on Arizona elections, both of which violate Arizona law,” Ms. Mayes said in a statement.

Polymarket Publishes ‘Enhanced’ Integrity Rules as Political Pressure Mounts on Prediction Markets Over ‘Insider Trading’

More from the New York Sun

Iran’s Supreme Leader Taunts Trump’s Pitch for Widening the Abraham Accords, Chanting ‘Death to America and Israel’

CBS Backs Off Crackdown on Clips of Stephen Colbert’s ‘Only in Monroe’ Appearance

Mamdani Debuts Sweeping, Costly Housing Plan — and Experts Are Skeptical

More from the New York Sun

Iran’s Supreme Leader Taunts Trump’s Pitch for Widening the Abraham Accords, Chanting ‘Death to America and Israel’

CBS Backs Off Crackdown on Clips of Stephen Colbert’s ‘Only in Monroe’ Appearance

Mamdani Debuts Sweeping, Costly Housing Plan — and Experts Are Skeptical

In Surprise Rebuke of Trump, South Carolina Senators Reject Redistricting, Preserving State’s Lone Blue District

Harvard Names Wife of Times Columnist Kristof, Whom Israel Accused of ‘Blood Libel,’ To Lead Its Board

Rapper Drake, in New Album, Calls To ‘Free’ Sam Bankman-Fried, but the Crypto Mogul’s Lane to Liberty Looks Bleak

In Sharp Reversal, Canada Donut Icon Tim Hortons Will Hire Locals To Fill Youth Employment Hole

An Abstract Artist Delights At Painting Within Her Comfort Zone