Kalshi Adds Insider Trading Safeguards Under Federal Pressure

Kalshi rolled out tighter insider trading controls on Tuesday, adding employment disclosure and a 24-hour whistleblower line to a prediction market platform that has spent the last year under the regulatory squeeze of federal prosecutors and a congressional probe. The Wall Street Journal first reported the changes, which take effect immediately and are designed to screen traders before they ever place a bet on markets deemed at high risk of insider trading or manipulation.

The platform unveiled three new features: a risk scoring system for every market it lists, a requirement that traders in high-risk markets submit employer information, and a dedicated whistleblower intake that routes tips to Kalshi’s surveillance team around the clock. The measures, drawn from the recommendations of Kalshi’s independent Surveillance Audit Committee, amount to the most concrete self-policing step yet from a federally regulated prediction market that has watched its rival Polymarket absorb two federal prosecutions in two months.

The Three Features Kalshi Turned On

The Wall Street Journal first reported the changes on Monday, and Kalshi confirmed the rollout on Tuesday through its own newsroom. The platform’s three new features are risk scoring, employment verification, and enhanced whistleblower tools, all effective immediately, the company said in Kalshi’s announcement of the new framework.

Kalshi’s risk scoring framework, the first of the three new features, evaluates each market against six factors drawn from traditional market integrity doctrine. The factors are weighted by impact, and any market that lands above a threshold gets the full employment verification treatment before trades are allowed. The framework builds on Kalshi’s existing surveillance stack, which already screens every order in real time. The new wrinkle is that Kalshi will now require disclosure from the trader, not just the firm. The committee’s charter is to identify gaps in this kind of framework, and the risk score is the first thing it recommended.

Prediction markets need to be safe spaces to trade, and Kalshi is committed to leading the industry on market integrity.

That is Robert DeNault, Kalshi’s Head of Enforcement, writing in the platform’s announcement post, where he framed the new measures as the first wave of recommendations from the independent Surveillance Audit Committee. The committee’s mandate, set when Kalshi stood it up earlier this year, is to stress-test monitoring and enforcement of insider trading, market manipulation, and spoofing, and to deliver quarterly reports.

• Corporate KPI or events risk: markets tied to corporate KPIs, product releases, and other traditional MNPI territory.
• Outcome concentration risk: lower for broad, decentralized processes, higher where a single individual or opaque group holds broad discretion.
• Market importance: ranges from niche hobbyist markets to critical-scale markets with national or geopolitical reach.
• Regulatory risk: evaluates whether the market is compatible with applicable regulations.
• Non-traditional insider risk: covers people with material non-public information but no preexisting legal duty to protect it.
• National security risk: assesses the degree of kinetic activity that could connect to a market’s resolution.

The Q1 Numbers Kalshi Cites

Kalshi also published a Q1 2026 enforcement tally alongside the announcement: 150+ investigations opened, more than 100 potential insider trades blocked by new screening tools, more than 20 cases referred to law enforcement, and five disciplinary actions. The figures are the first time Kalshi has disclosed a quarterly snapshot of its enforcement work, and they sit at the heart of its argument that self-policing is working.

Kalshi is the first U.S.-regulated prediction market to publish enforcement data at this granularity. The committee is set to deliver quarterly reports, and Kalshi has pledged to act on each one. Whether the next quarter’s report matches or exceeds those numbers will be the first public test of whether the new framework is scaling or stretching.

• 150+ investigations opened (confidential until cases close)
• 100+ potential insider trades blocked by new screening tools
• 20+ referrals to law enforcement
• 5 Kalshi disciplinary actions

A Chain of Federal Cases Built to This Point

Two federal prosecutions in close succession have framed the squeeze Kalshi is responding to. The first, unsealed April 24, charged U.S. Army Master Sergeant Gannon Ken Van Dyke with using classified information to place Polymarket bets that netted him more than $409,000, and the second, unsealed in late May, charged Google software engineer Michele Spagnuolo with commodities fraud, wire fraud, and money laundering.

Spagnuolo, a 36-year-old Italian citizen living in Switzerland, used a Google internal tool that flagged “Google Confidential” in red text to bet approximately $2,754,092 across 25 separate outcomes on Polymarket, prosecutors said. He profited approximately $1.2 million. U.S. Attorney Jay Clayton, who ran the SEC from 2017 to 2021, framed the case in the language of traditional Wall Street enforcement. “Today’s charges reinforce a decades-old message,” Clayton said in the federal complaint against Spagnuolo: “corporate insiders cannot use confidential business information to turn a profit in our markets.” The case is being handled by the SDNY’s Securities and Commodities Fraud Task Force, and Spagnuolo was released on bond.

Read alongside the Van Dyke case, the Spagnuolo indictment stretches the misappropriation theory from government secrets to corporate ones, putting every event contract on every platform inside the same prosecutorial frame. The two cases together are the working theory behind Comer’s letters, Kalshi’s framework, and the bills now gathering in committee. See the Google engineer’s Polymarket case breakdown for the full filing details.

Congress and the CFTC Are Closing In

On May 22, House Oversight Chair James Comer, a Kentucky Republican, opened a congressional probe into prediction market insider trading. He sent letters to Polymarket CEO Shayne Coplan and Kalshi CEO Tarek Mansour. The request covers identity verification, geographic restrictions, and how each platform detects anomalous trading. Comer’s committee asked the platforms to turn over the documents by June 5.

Comer’s reasoning, laid out on CNBC’s “Squawk Box,” went well beyond a single platform. “There’s a concern now that members of Congress, members of the president’s administration, any type of government employee, can use basic insider knowledge and make huge profits on anything government related,” Comer said. He proposed barring members of Congress, government employees, and administration officials from prediction markets altogether. More than 80 Polymarket users placed suspiciously timed bets, including wagers made hours before undisclosed U.S. and Israeli military operations against Iran, according to a New York Times investigation cited in Comer’s letter. In April, Kalshi suspended three congressional candidates who wagered on their own candidacies, and Comer’s letter cited those suspensions as well as Kalshi’s expansion into more than 140 countries.

CFTC Chair Michael Selig opened a separate rulemaking track in March, calling for public comment on event contract oversight. The agency’s jurisdiction was reinforced in April when a federal appeals court ruled that New Jersey regulators could not bar Kalshi from offering sports event contracts.

What Self-Policing Cannot Reach

Kalshi’s new framework sits on the U.S.-regulated side of the prediction market industry. The risk scoring, the employment check, and the whistleblower tools apply to Kalshi’s own order book, which the company runs under CFTC designation and where users cannot trade anonymously. Polymarket, the company that has absorbed both federal indictments, runs a much larger offshore book that Kalshi’s rules cannot see.

Kalshi told NBC News that it will not verify a trader’s employment “unless an investigation is warranted,” meaning the new disclosure requirement is largely a screening tool rather than a real-time gate. The Iran bets that prompted part of Comer’s concern took place on Polymarket, not Kalshi, and the more than 80 suspicious accounts the New York Times identified were also offshore. The offshore book is exactly where the federal indictments landed, and Kalshi’s new rules will not change that. Inside Kalshi’s own book, where every order is already screened in real time, the new employment check is the most concrete structural change the company has made in years.

The Stakes for the Whole Industry

Kalshi is positioning its framework as a working model the CFTC could adopt, partly or in full, when it finalizes its event contract rule. The alternative, a Congress armed with a year of federal prosecutions, has a growing list of bills ready to fill the gap. Tuesday’s announcement, in Kalshi’s own framing, was the new floor, not the ceiling.

Comer wants members of Congress, government employees, and administration officials off the platforms entirely. Kalshi’s head of communications, Elisabeth Diana, said in a statement: “We look forward to engaging with the Committee and its members about the systems and processes that we have spent years building.”

The committee’s next quarterly report is the first public test of whether Kalshi’s model can outpace the legislation gathering behind it. The CFTC’s rulemaking clock is now ticking in parallel. Comer told CNBC the investigation would help “prove a case” for legislation. What Kalshi called a self-policing wager on Tuesday is also a test of how long industry-led enforcement can keep the legislation at bay.

Frequently Asked Questions

What did Kalshi just change to fight insider trading?

Kalshi introduced three new features on Tuesday, all effective immediately. The first is a risk scoring system that ranks every market on six factors, including corporate KPI exposure and national security risk. The second is a requirement that traders in high-risk markets submit employer information before placing a trade. The third is a dedicated whistleblower intake that routes tips to Kalshi’s 24/7 surveillance team.

Why did Kalshi announce these new measures now?

The timing tracks two federal prosecutions against Polymarket traders. An April 24 indictment charged a U.S. Army Master Sergeant with using classified information to bet on the Maduro ouster, netting more than $409,000. A late-May indictment charged a Google software engineer with using an internal Google tool to net approximately $1.2 million on Polymarket bets. A congressional probe opened by House Oversight Chair James Comer on May 22 added another layer of pressure.

What happened to the Google engineer accused of insider trading on Polymarket?

Federal prosecutors in the Southern District of New York charged Michele Spagnuolo, a 36-year-old Italian citizen living in Switzerland, with commodities fraud, wire fraud, and money laundering. Between October 15 and December 4, 2025, Spagnuolo risked approximately $2,754,092 on Polymarket bets tied to Google internal data and profited approximately $1.2 million. The case is being prosecuted by the SDNY’s Securities and Commodities Fraud Task Force.

Is Kalshi regulated?

Yes. Kalshi is regulated by the Commodity Futures Trading Commission as a designated contract market, with its U.S. operations overseen by the federal agency. Kalshi does not allow users to place bets anonymously on its platform. A federal appeals court ruled in April 2026 that New Jersey state regulators could not bar Kalshi from offering sports event contracts, reinforcing the CFTC’s exclusive federal jurisdiction.

What is James Comer’s investigation into prediction markets?

On May 22, Comer, the Republican chair of the House Oversight and Government Reform Committee, opened an investigation into insider trading on Kalshi and Polymarket. He sent letters to Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan requesting internal records on identity verification, geographic restrictions, and how each platform detects anomalous trading activity. Comer has publicly proposed barring members of Congress, government employees, and administration officials from prediction markets.

Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or legal advice. Prediction markets and event contracts carry significant risk, and insider trading rules and platform terms are subject to change. Figures and enforcement details are accurate as of June 9, 2026. Consult a qualified professional before making any trading or investment decision.