People looking to place certain wagers on prediction market operator Kalshi will soon have to disclose their employer in an effort to prevent insider trading, the company has announced.
The platform, which enables users to bet against one another on elections, sporting events, and cultural topics, stated Tuesday that it will begin gathering employment information from users attempting to place bets that could be influenced by non-public information.
Kalshi noted that the policy will apply to "markets with heightened insider or manipulation risk." It cited as an example a hypothetical trade on whether OpenAI or Anthropic will be the first to go public.
Prediction markets are facing increasing concerns about insider trading as their popularity continues to rise.
Former Congressman George Santos is currently under investigation for alleged insider trading on Kalshi, according to NPR.
Earlier this year, Kalshi revealed it had discovered that congressional candidates from Minnesota, Texas, and Virginia were placing bets on their own races.
Kalshi reported that in the first quarter of this year, it made over 20 referrals to law enforcement regarding potentially illegal trading activity after launching more than 150 of its own investigations.
Last month, a Google employee was charged with insider trading for using company information to place bets on Polymarket, a rival prediction market operator.
Earlier this year, a US special forces soldier was allegedly found to have made successful bets on the platform concerning the removal operation of Venezuelan President Nicolás Maduro. He has pleaded not guilty.
By requiring more information from users about their places of employment, Kalshi said it will be able to "identify presumptive insiders… and screen them out before a trade is ever placed."
Kalshi stated it would employ a risk scoring method to identify markets that appear more susceptible to manipulation or insider trading, such as those related to national security issues.
"By running an assessment on the national security risk a market might present before we list it, we can better prevent dangerous events from having a negative effect on our markets – or vice versa," the company said.
Prediction markets like Kalshi have experienced a significant surge in popularity over the past few years, particularly in the US, where they are regulated as trading, allowing them to operate in all 50 states despite gambling restrictions.
By enabling millions of people to collectively wager billions of dollars on the outcome of seemingly any public event, the platforms have faced scrutiny over insider trading as well as concerns about gamifying serious issues, such as military action.
Earlier this year, the White House warned staff not to use insider information to place bets on prediction markets, following reports of suspiciously timed trades on prediction markets in the lead-up to the US-Israel conflict with Iran.
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