Kalshi Moves to Crack Down on Insider Trading, Will Require Some Bettors to Disclose Employers
Prediction platform Kalshi is trying to fight accusations that insiders are using confidential information to make big profits from betting. The Wall Street Journal reported that the company plans to require participants in some bets to disclose the identities of their employers, in line with recommendations issued by an outside advisory committee that reviewed ways to prevent market manipulation. The requirement to disclose where they work will apply to users placing bets based on information that is not publicly available. According to the company, the changes are expected to take effect in the coming weeks.
The move comes in response to sharp criticism directed at Kalshi and its rival Polymarket, after users made large profits betting on national security issues such as attacks in Venezuela and Iran, as well as on company performance. However, according to the company’s announcement, in most cases users’ employment details will not be verified unless suspicious activity arises. If such suspicion does arise, an investigation will be opened and proof of the employment information provided will be required.
According to the advisory committee’s report, collecting information about users’ jobs can improve "oversight, help in the early stages of reviews, and also serve as an alert." The report also revealed that during the first quarter of the year, Kalshi submitted more than 20 reports to the Commodity Futures Trading Commission (CFTC) and the U.S. Department of Justice. According to people familiar with the matter, some of the reports concerned accounts linked to spouses of military personnel. These accounts, they said, placed accurate bets on the timing of the U.S. attack in Venezuela just days before it occurred.
Kalshi also said it uses an outside provider to prevent members of Congress, the president, ministers, judges and other senior officials, as well as their family members, from joining the platform. Kalshi also bars candidates for public office and poll workers from betting on election outcomes.
Kalshi’s efforts to tighten oversight come after several Polymarket participants were indicted in recent months on suspicion of using insider information. In one case, a U.S. soldier was charged with using classified information about the capture of Venezuelan President Nicolas Maduro to place bets, and last month a Google employee was indicted for using insider information about top search trends to make $1.2 million in Polymarket bets.
