Kalshi to Block Athletes and Politicians from Trading on Prediction Markets

TLDR:

• Kalshi partners with IC360 to screen and block athletes and coaches at registration before any trades are placed.
• Polymarket bans trading on stolen tips and by anyone who can directly influence the outcome of an event.
• Senators Schiff and Curtis introduced a bipartisan bill to ban sports trading on all CFTC-regulated exchanges.
• Arizona filed criminal charges against Kalshi, accusing the platform of running an unlicensed sports gambling operation.

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Prediction markets are tightening their rules following regulatory pressure from both federal and state authorities.

Kalshi announced plans to preemptively block athletes, coaches, and political candidates from trading on markets tied to their own events. Rival platform Polymarket also introduced stricter insider trading rules.

Meanwhile, lawmakers introduced bipartisan legislation targeting sports-related prediction markets, and Arizona filed criminal charges against Kalshi for unlicensed operations.

Kalshi Partners with IC360 to Screen Users at Registration

Kalshi’s new policy goes beyond existing rules that already prohibited athletes from betting on their games. The company will now install a mechanism that stops these trades from being placed at all. This is a shift from reactive enforcement to proactive prevention.

To make this work, Kalshi is partnering with Integrity Compliance 360, known as IC360. The firm will screen athletes, coaches, and officials when they first register on the platform. This step adds a structural layer of accountability before any trading begins.

Political candidates will also face restrictions under the new policy. They will be blocked from placing trades on markets connected to their own campaigns. This mirrors the approach applied to sports participants.

Robert DeNault, Kalshi’s head of enforcement, addressed the rationale directly. He told Axios, “You’ll never stop all illicit activity everywhere. That’s just an impossible standard. But you shouldn’t make the perfect the enemy of the good either.” He added that the goal is to actively work toward good solutions using available technology.

Gambling analyst Dustin Gouker weighed in on the broader challenge. He told Axios, “I think the prediction markets view insider trading as an issue that can kill the golden goose, and they’re taking it seriously.” He also noted that surveillance across thousands of markets is complex but not impossible to improve.

Polymarket and Lawmakers Respond to Growing Scrutiny

Polymarket introduced what it called “enhanced market integrity rules” on the same day as Kalshi’s announcement.

The rules ban trading based on stolen information or illegal tips. They also prohibit trading by anyone who can directly influence the outcome of an event.

U.S. Senators Adam Schiff and John Curtis introduced the Prediction Markets Are Gambling Act on the same day. The bipartisan bill would ban CFTC-regulated exchanges from allowing trading on sports or casino games.

Senator Curtis made his position clear in a statement, saying, “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.”

Senator Curtis further argued that the legislation would clarify regulatory jurisdiction. He said it would ensure that states maintain authority over sports betting and casino gaming. This puts state lawmakers in direct opposition to the CFTC’s expanding oversight.

The Arizona attorney general added legal pressure by filing criminal charges against Kalshi last week. The state accused the company of running an unlicensed sports gambling operation. This directly conflicts with the federal CFTC’s position on oversight.

Trump-appointed CFTC Chair Mike Selig has signaled his intent to fight state-level efforts. He wants the CFTC to retain regulatory authority over prediction markets. This creates a clear conflict between federal and state regulators that remains unresolved.

The broader context involves several recent athlete scandals. Multiple MLB pitchers, NBA players, and NCAA basketball players have faced accusations of game-fixing.

Gouker summed it up plainly, noting that improving surveillance across prediction markets is “certainly not an impossible problem” for the industry to address.

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