Kalshi Tightens Insider Controls as Senate Targets Prediction Markets

• Kalshi added safeguards to block politicians and athletes from trading contracts.
• Insider risks in prediction markets are rising as real money flows increase. 
• Bipartisan Senate bill targets sports and casino markets on regulated platforms.

Kalshi is tightening controls before regulators force the issue, as the firm’s head of enforcement, Robert J Denault, confirmed new guardrails designed to block politicians and athletes from trading in sensitive markets.

The target is to remove participants who could act on non-public information before it hits the market. Notably, these controls have been in development for months, but rollout now aligns with recent guidance from the Commodity Futures Trading Commission (CFTC) and fresh proposals in Congress.

The plan includes reducing insider access, reducing manipulation risk, and protecting market credibility. Kalshi wants these rules to become industry standard.

Senate Bill Targets Sports and Casino-Style Contracts

Meanwhile, regulatory pressure is rising from lawmakers. Senators Adam Schiff and John Curtis introduced a bipartisan bill to ban sports-related contracts and casino-style markets on CFTC-regulated platforms.

Sports contracts resemble gambling but operate under federal derivatives rules. That creates a gap as states lose control, tribal systems get bypassed, and no tax revenue flows back. The bill aims to close that gap by removing these contracts entirely.

DraftKings and FanDuel stocks rose following the news. Traders are pricing in reduced competition if prediction markets lose access to sports.

Kalshi and industry voices push back, claiming that a ban on regulated platforms will drive activity offshore.

Insider Trading Concerns Move From Theory to Data

Recent activity on Polymarket shows why enforcement is tightening. Eight newly created accounts placed nearly $70,000 in bets on a US-Iran ceasefire before 31 March. The payout stands near $820,000.

These accounts were created around 21 March as bets were placed at market price, not discounted levels. Another account placed a successful bet on US strikes against Iran shortly before they happened. That account had no other activity. 

Jurisdiction Fight Escalates Across States and Federal Regulators

The CFTC claims full authority over event contracts as part of the derivatives market. States disagree and are acting independently.

Nevada secured a temporary restraining order blocking Kalshi from offering contracts tied to sports, elections, and entertainment. Arizona filed criminal charges, calling the platform an unlicensed gambling operation. Michigan and Massachusetts have also taken legal action.

Kalshi is fighting back in court across multiple states, arguing that federal jurisdiction overrides state law. At the same time, it is adding internal controls to reduce regulatory pressure.

Related: US Senators Move to Ban Sports Betting on Prediction Markets Via New Bipartisan Bill