MW Thinking about insider trading on prediction markets? Kalshi wants to make an example of you.
By Gordon Gottsegen
The crackdown on insider trading is about protecting investors - and marketing
Prediction markets let people bet on anything, including events that people may have insider information about.
Prediction-market platform Kalshi recently unveiled a swath of "market integrity" updates that all relate to one thing: stopping illegal trading by insiders.
The updates include things like risk scoring for markets that have heightened potential for manipulation, employment verification that could help identify the trading of nonpublic corporate information, and whistleblower features for traders to report suspicious activity.
They're needed because prediction markets have an insider-trading problem. In one recent case, an employee of Alphabet's $(GOOG)$ $(GOOGL)$ Google was charged with using internal company data to trade on prediction markets related to Google's search trends. A separate case involved a member of the U.S. military getting caught trading on the capture of Venezuelan leader Nicolás Maduro before it happened.
These high-profile cases are only the tip of the iceberg. In the first quarter of 2026, Kalshi said it had launched over 150 investigations into insider trading, blocked over 100 potential insider trades through its new screening tools, referred over 20 cases to law enforcement and taken five disciplinary actions, according to company data shared with MarketWatch.
Still, 150-plus investigations into insider trading is comparatively few in comparison with the 54 million to 88 million transactions per month Kalshi saw in the first quarter, according to data from Dune. But any insider trading on prediction markets erodes trust in the platforms and causes traders to question the market's integrity.
Read: Google engineer charged after making $1.2 million on Polymarket bets - showing insider trading is becoming everyone's problem
Kalshi's response seems to be not only rolling out internal features to stop insider trading, but also going public with its efforts and using them as marketing.
Kalshi has put out press releases when it catches insider traders, like it did with a case involving a video editor working for YouTuber MrBeast. The company invited TV crews to come to its New York headquarters so it could show off its surveillance and enforcement systems, and it launched an ad campaign that focused on banning insider trading.
In that ad campaign, Kalshi took swipes at its competitor Polymarket, pointing out that Kalshi is a U.S.-regulated exchange, while most of Polymarket's trading happens offshore. But Polymarket has also taken steps to curb insider trading in order to comply with law enforcement and build trust with its customers.
"Polymarket surveils and monitors for insider trading and other illegal activity, consistent with other markets. The transparency of the blockchain provides the public with a real-time view of all trading activity, which allows us to efficiently identify and trace potential wrongdoers, as well as allowing the general public to flag suspicious trading activity," a Polymarket spokesperson said in a statement to MarketWatch.
(Polymarket has a data partnership with Dow Jones, the parent company of MarketWatch.)
Polymarket also provided numbers to show that it was taking enforcement seriously.
"Although we do not discuss pending investigations or specific matters, our internal process has led to nearly 100 wallet referrals to law enforcement to date, including the referrals that resulted in the only arrests and first and second prediction-markets insider-trading cases charged in the United States," the spokesperson said.
-Gordon Gottsegen
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 10, 2026 19:22 ET (23:22 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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