Polymarket Just Dropped Its Toughest Insider‑Trading Rules Yet – But Can They Really Calm DC?

Polymarket, the world’s largest prediction market, is rolling out new safeguards against insider trading and manipulation.

Neal Kumar, Polymarket’s chief legal officer, said in a statement that the goal of this update to the rulebook is clarifying the expectations they have for the users. “Markets thrive on clarity”, he claims:

“These rule enhancements make our expectations abundantly clear for every participant across both platforms and highlight the compliance infrastructure we have already built. As Polymarket continues to scale, we will build on our foundation with clear communication to Polymarket’s users to ensure our markets do what they do best — surface truth.”

Polymarket updated its Terms of Use and U.S. Rulebook with enhanced “market integrity” rules across both its DeFi platform and CFTC‑regulated U.S. exchange. The new language explicitly bans trading on stolen or confidential information when using it would violate a duty of trust or confidence (classic insider‑trading standard). It also prohibits trading on illegal tips, where a user knows or should know the person sharing the information is themselves barred from trading on it. Additionally, users who can influence the outcome of a bet, such as government officials, corporate executives, or athletes tied to the event, are barred from trading on related contracts.

The rulebook also spells out broader manipulation bans, including spoofing, wash trading, fictitious transactions, front‑running, self‑dealing and other disruptive practices. The dedicated “Market Integrity” provide tools to report suspicious activity across both platforms, highlighting a multi‑layer surveillance and enforcement framework that combines automated monitoring with human review to flag and investigate questionable trades.

Similarly, on its side, Kalshi announced expanded “guardrails” against insider trading and market manipulation, framed as a response to CFTC guidance and the latest congressional proposals. The exchange is rolling out technological screens that aim to preemptively block politicians, political candidates and campaign insiders from trading on their own races. Similar screens will bar athletes and other “relevant people”, like team staff, league insiders and other connected personnel, from trading in sports markets they are involved with.

Polymarket and Kalshi are now racing to build compliance as a moat: whoever convinces regulators first may become the default institutional on‑ramp, while weaker venues risk being regulated into the ground. Traders can expect tighter KYC/surveillance and less tolerance for “edge” based on non‑public info.

Cover image from Perplexity, BTCUSDT chart from Tradingview