Sweeping user bans are being implemented by major prediction market platforms Kalshi and Polymarket, targeting insider trading amidst heightened regulatory scrutiny. These platforms, leaders in the event-based contract space, announced stricter measures on Monday, March 23, 2026, coinciding with the introduction of a bipartisan bill in the U.S. Congress aimed at restricting sports-related contracts.
The proactive stance from Kalshi and Polymarket comes as lawmakers and regulators express increasing concern over potential market manipulation and the inherent nature of event-based contracts. Senators Adam Schiff (D-Calif.) and John Curtis (R-Utah) introduced the “Prediction Markets Are Gambling Act” on the same day, signaling a legislative push to redefine and regulate these markets more stringently.
Understanding the New Restrictions on Prediction Market Platforms
Both Kalshi and Polymarket have unveiled new policies and technological safeguards designed to prevent insider trading. Kalshi’s bans will preemptively block political candidates from trading on their own campaigns and individuals involved in college and professional sports – including athletes, personnel, and referees – from trading on related sports markets. Kalshi emphasized that these efforts have been under development for months, representing a proactive response to evolving regulatory guidance and proposed legislation. The platform already prohibits insider trading, defining it as trading by anyone with access to material non-public information or who is an employee/affiliate of a source agency for a contract. In the past year, Kalshi has investigated approximately 200 cases, with over a dozen becoming active, resulting in bans and financial penalties for violators.
Polymarket, on its part, has updated its rules to explicitly prohibit trading on stolen confidential information, using illegal tips, or betting if one is in a position to influence the outcome of an event. These rules apply across both its decentralized finance (DeFi) platform and its U.S. regulated exchange. Polymarket has previously faced criticism for instances where users allegedly profited from well-timed bets related to U.S. military actions, making these enhanced rules a critical step in strengthening market integrity.
“The convergence of new platform policies and legislative action underscores a pivotal moment for the prediction market industry, demanding greater transparency and accountability.”
The “Prediction Markets Are Gambling Act”
The bipartisan “Prediction Markets Are Gambling Act,” introduced by Senators Schiff and Curtis, seeks to amend the Commodity Exchange Act. If passed, it would prohibit platforms regulated by the Commodity Futures Trading Commission (CFTC) from offering contracts on sporting events and casino-style games. The senators contend that these types of contracts are indistinguishable from gambling and should fall under state-level regulation, rather than federal oversight by the CFTC. This legislative effort directly impacts the scope and future offerings of platforms like Kalshi and Polymarket.
Why Stricter Measures Are Being Implemented
The primary drivers behind these sweeping user bans and legislative initiatives are the urgent need to combat insider trading and address escalating concerns from lawmakers and regulators regarding market manipulation. There is a strong belief among legislators that sports-related prediction markets are essentially unregulated gambling, which undermines state authority and consumer protections. The CFTC has also provided guidance concerning insider trading and manipulation risks within prediction markets. By implementing these stricter measures, both Kalshi and Polymarket aim to bolster market integrity, enhance user trust, and align with evolving regulatory standards.
The announcements on March 23, 2026, coupled with the new bill, signify a critical juncture for the prediction market industry. Platforms must adapt swiftly to ensure compliance and maintain public confidence as the regulatory landscape continues to evolve.
