Prediction market operator Kalshi has announced that people looking to place certain bets will now have to reveal where they work, in a bid to stop insider trading. Because nothing says 'fair market' like asking traders to voluntarily out themselves as potential cheaters.
The platform - where users bet against each other on elections, sporting events, and culture - said Tuesday it will start collecting work information from users attempting to place bets that could benefit from insider information. Kalshi specified the rule will apply to "markets with heightened insider or manipulation risk," offering the example of a possible trade on whether OpenAI or Anthropic will go public first. Because nothing screams 'insider risk' like a bet on two AI companies' IPO timelines.
Prediction markets face growing concerns around insider trading as they continue to surge in popularity. Former Congressman George Santos is currently being investigated for alleged insider trading on Kalshi, according to NPR. And earlier this year, Kalshi said it had discovered candidates for Congress from Minnesota, Texas, and Virginia were betting on their own races. Because apparently, if you can't trust politicians to bet against themselves, who can you trust?
Kalshi said that in the first quarter of this year, it made more than 20 referrals to law enforcement of possibly illegal trading activity after opening 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. And earlier this year, a US special forces soldier was found to have allegedly made successful bets on the platform regarding the removal operation of Venezuelan President Nicolás Maduro. He has pleaded not guilty.
By requiring more information from users about where they work, Kalshi said it will be able to "identify presumptive insiders… and screen them out before a trade is ever placed." Kalshi also said it has developed a new risk scoring method to identify betting markets that appear more at risk of manipulation or insider trading, including those pertaining to specific companies and national security matters. In other words, they're building a system to catch the people who weren't smart enough to bet on something less obvious.