Kalshi adds surveillance partnership with StarCompliance as prediction market scrutiny rises

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Kalshi partners with StarCompliance

Highlights

StarCompliance launches a platform to let financial firms monitor employee trading on prediction markets via Kalshi, flagging suspicious volume, patterns, and timing.
The CFTC and Kalshi are facing expanded state-level crackdowns, with at least 11 U.S. states pursuing legal action or regulatory measures against prediction market operators.
Federal-state regulatory clashes intensify as Nevada, Arizona, and Minnesota block Kalshi's operations, with lawsuits and legislative inquiries focusing on insider trading risk and market legitimacy.

Monitoring platform targets employee prediction market activity

As reported by Cointelegraph on Wednesday's announcement, the new system is built to help financial companies detect and investigate employee trading on prediction markets by flagging activity based on transaction volume, trading patterns, market categories and trades made during work hours. It also gives firms a centralized process for handling investigations and maintaining audit records tied to such activity.

StarCompliance says the product is meant to address risks linked to material non-public information, as employees at financial institutions may have access to sensitive business or market data that could be used in event contract trading. The capability expands StarCompliance's existing employee compliance platform, which already covers traditional securities and digital asset activity, to include prediction market trading through Kalshi.

The launch follows a recent criminal case involving alleged use of non-public information on a rival platform. A federal judge has set a December trial date for U.S. Army Master Sgt. Gannon Ken Van Dyke, whom prosecutors accuse of using confidential details about a military operation targeting Venezuelan President Nicolás Maduro to make more than $400,000 on Polymarket; Van Dyke has pleaded not guilty.

Regulatory fight broadens across U.S. states

Prediction markets are also facing intensifying scrutiny across the U.S., with at least 11 states taking legal or regulatory action against platforms including Kalshi and Polymarket. The central dispute is whether event contracts fall under state gambling laws or should be treated as federally regulated derivatives overseen by the Commodity Futures Trading Commission, creating a patchwork of lawsuits, cease-and-desist orders and legislative proposals.

Nevada becomes the first state to temporarily block Kalshi's operations earlier this year, while Arizona accuses the company of running an illegal gambling business by offering event contracts to residents. Kalshi and the CFTC are pushing back, with Kalshi suing Minnesota at the end of May after the state enacted what CFTC Chair Michael Selig describes as the country's first outright ban on prediction markets, and the CFTC joining a separate challenge over Rhode Island's approach to event contract regulation.

Last week, the CFTC sues New Mexico officials after the state accuses Kalshi of offering unlicensed sports betting, marking the eighth state targeted by the agency in its effort to stop state-level restrictions. Lawmakers are also increasing pressure, with Representative James Comer last month requesting information from the chief executives of Kalshi and Polymarket about their responses to insider trading concerns linked to suspiciously timed trades around U.S. military actions against Iran.

Speaking at Bitso's Stablecoin Conference in Mexico City on June 16, Digital Chamber CEO Cody Carbone says the clash between federal regulators and state authorities is likely to continue for years and could eventually reach the U.S. Supreme Court. He says lawmakers are still debating which types of event contracts should be allowed, including markets tied to politics and war, while insider trading risks are likely to remain central to future legislation and oversight.

Our earlier article on the proposed U.S.-Iran agreement explained that the reported 14-point framework looks more like a temporary geopolitical pause than a durable settlement. We noted that key flashpoints—such as maritime security and Iran’s uranium issue—remain largely unresolved, which can keep uncertainty elevated for energy markets, shipping security, and broader investor sentiment.

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