Regulated prediction market Kalshi announced a sweeping expansion of its market integrity rules on Monday, deploying new technological guardrails that preemptively ban political candidates, athletes, and league officials from trading on events in which they are directly involved.
The move represents the platform’s most aggressive attempt to date to stamp out insider trading and market manipulation, arriving on the exact same day U.S. lawmakers introduced a bipartisan bill aimed at crippling the industry’s fastest-growing sectors.
The Mechanics of the Ban
Kalshi’s new policy transitions the platform from a reactive enforcement model to a preemptive one. According to the company’s official release, the new restrictions target two primary groups:
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Political Candidates: While elected officials and members of Congress were already restricted, Kalshi has introduced automated screening tools designed to proactively block actively campaigning politicians from taking positions on their own electoral races.
- Sports Professionals: Athletes, coaches, referees, and team personnel are now preemptively blocked from trading on markets associated with their affiliated leagues. To enforce this, Kalshi has partnered with IC360, a leading integrity provider for professional leagues and the NCAA, to integrate comprehensive screening lists into its matching engine.Additionally, the platform launched a decentralized whistleblower feature directly on its market pages, allowing community members to flag suspicious trading patterns or potential regulatory violations in real-time.
“All markets have bad actors, and we believe that staying ahead of bad actors means developing new technology and policies,” Kalshi stated on Monday.
Rival prediction platform Polymarket quickly followed suit hours later, implementing its own set of enhanced prohibitions barring users who possess confidential information or have the power to influence event outcomes.
The Catalyst: The ‘Prediction Markets Are Gambling Act’
The synchronized rush to tighten insider trading rules is not a coincidence. The announcements served as an immediate countermeasure to the “Prediction Markets Are Gambling Act,” a bipartisan piece of legislation introduced Monday by Senator Adam Schiff (D-Calif.) and Senator John Curtis (R-Utah).
The bill seeks to prohibit entities registered with the Commodity Futures Trading Commission (CFTC)—which includes Kalshi—from listing event contracts that resemble sports bets or casino-style games.
Senator Curtis echoed the sentiment, arguing that the legislation is necessary to protect consumers from “addictive sports betting” and to restore regulatory jurisdiction back to individual states rather than federal agencies like the CFTC.
The federal legislation compounds an already intense legal battle at the state level. Over the past month, prediction markets have faced mounting hostility from state attorneys general. Arizona recently filed criminal charges against Kalshi, accusing the platform of operating an illegal gambling business, while a Nevada judge issued a temporary restraining order halting the company’s operations within the state just last week.
Kalshi has fiercely pushed back against the characterization of its platform as a gambling den. Tarek Mansour, CEO of Kalshi, publicly lambasted the new Senate bill, framing it as a protectionist measure engineered by legacy gaming conglomerates.
The clash highlights a critical inflection point for prediction markets. After securing major legal victories against the CFTC in late 2024 to list election contracts, platforms like Kalshi and Polymarket experienced explosive volume growth throughout 2025 and early 2026.
However, by expanding aggressively into sports and entertainment wagers to sustain that momentum post-election, these platforms have inadvertently triggered a turf war with the deeply entrenched, highly regulated traditional sports betting industry. If the Schiff-Curtis bill advances, it could effectively sever a massive revenue artery for the prediction market ecosystem.
