Kalshi tightens compliance controls on insider trading risks

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Kalshi insider trading controls

Highlights

Kalshi now requires employment verification from traders to identify presumptive insiders with potential access to material, non-public information.
New compliance tools include a risk-scoring system for new markets and an expanded whistleblower process to report suspicious activity on the platform.
These tighter controls follow increased regulatory scrutiny, highlighted by Minnesota's proposed blanket ban and ongoing litigation between the CFTC and Minnesota over market legality.

New trading checks and surveillance tools

As reported by Business Insider, Kalshi's enforcement and legal counsel Bobby DeNault said in a blog post published Tuesday that the New York-based company is requiring traders to complete employment verification before they can trade.

DeNault said the process is designed to screen for presumptive insiders, defined as people who may hold material, non-public information about a market's outcome. A screenshot included in the post shows Kalshi asking users for their current employer, industry, and job function.

DeNault also outlined two additional measures. One is a risk-scoring system for new markets, ranking them from niche social or hobbyist topics to markets with national or geopolitical reach, to assess their vulnerability to manipulation. The other is an expanded whistleblower process that allows users to report suspicious behavior, which he described as a frontline defense against abuse.

Regulatory pressure on prediction markets

These steps add to existing restrictions on the platform, including blocks on elected politicians, political candidates, and people involved in college and professional sports from trading.

Kalshi's tighter controls come as prediction markets such as Kalshi and Polymarket face growing pressure from lawmakers across the country. In May, Minnesota became the first state to propose a blanket ban on such markets after Gov. Tim Walz signed off on it.

The U.S. Commodity Futures Trading Commission, which regulates Kalshi and Polymarket, has filed a lawsuit against Minnesota and Walz, arguing that the state cannot criminalize the markets under state law. Kalshi did not respond to questions from Business Insider about how long the employment verification process typically takes or whether it applies to existing traders.

Our earlier coverage of the House Ways and Means Committee’s proposed digital asset tax framework explained how lawmakers are seeking to modernize U.S. tax rules for cryptocurrencies and related products. We noted that the effort aims to simplify compliance and reduce uncertainty for individuals and businesses, while positioning the U.S. to stay competitive as the digital economy and global standards evolve.

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