Kalshi Tech Aims to Prevent Insider Trading

Kalshi is launching technological guardrails that block politicians, athletes and other relevant people from trading in certain politics and sports markets on the company’s prediction markets platform.

The capabilities are designed to prevent insider trading and market manipulation, the company said in a Monday (March 23) blog post.

Kalshi said in the release that these guardrails have been in the works for months and that they proactively address a Commodity Futures Trading Commission (CFTC) guidance and proposed federal legislation that aims to prevent insider trading.

“All markets have bad actors, and we believe that staying ahead of bad actors means developing new technology and policies,” Kalshi said in the post.

One of Kalshi’s new tools preemptively blocks political candidates who try to trade on their own campaigns. The company’s policies have always prohibited such trades, and the firm already blocks elected officials, but the new tools block candidates as well, according to the post.

Another new tool will block known athletes, officials and employees involved in professional and college sports from trading markets associated with the sports in which they are involved. While these trades have always been banned, Kalshi now has screening lists for both collegiate and professional sports leagues that will help it enforce the ban, the post said.

Kalshi also added a whistleblower functionality to its market page, making it easier for the users of its platform to flag potential violations, per the post.

“Ensuring market integrity is not just a goal — it is a cornerstone of our business model,” Kalshi said in the post. “Today is just one iteration; we will continue to innovate and improve our systems to protect consumers.”

The CFTC’s Division of Market Oversight issued a predictions market advisory on March 12, reminding designated contract markets (DCMs) about their current regulatory obligations.

The advisory highlights several regulatory obligations, including ones that require DCMs to establish and enforce rules for trading, monitor trading activity and prevent market manipulation.

On Feb. 25, Kalshi announced that it reported two insider trading cases to the CFTC. One case involved a candidate who traded about $200 on his own candidacy for state office and then posted about it on social media.