Polymarket tightens insider rules on US and offshore venues

Polymarket tightened insider-trading rules across its US-regulated exchange and its offshore venue, barring wagers based on stolen confidential information, illegal tips, and by users who can influence an event’s outcome. Both platforms launched market integrity pages that explain the policy and provide channels to report suspected abuses.

The update clarifies that users may not trade using information obtained in breach of a duty of trust or confidence, such as data taken from an employer or government source. Bettors are also prohibited from acting on tips that are unlawful to share or receive, and from using second-hand information that originates from someone who is restricted. The company noted that the same standards apply on the offshore site, where most trading occurs and where identity checks are not required.

The integrity pages outline how the rules are enforced and include forms for reporting concerns. The policy focuses on the source and nature of information and on any ability a trader has to affect outcomes; individuals in positions to sway an event are barred from related markets.

Earlier this month, the Commodity Futures Trading Commission issued guidance on the oversight of prediction markets listed on US venues. While other derivatives markets can permit trading on lawfully obtained nonpublic information in certain settings, prediction platforms have faced questions about how to prevent unfair advantages on sensitive topics.

Trading in the sector has risen since last year, with prediction markets reporting higher activity, much of it tied to sports markets, as the Kalshi vs Polymarket rivalry becomes more central to the sector. Polymarket recently agreed with firms including Palantir Technologies to strengthen monitoring of its sports contracts, adding external tools and analytics to flag suspicious behavior.

Accusations of insider activity have surfaced on several markets. Six accounts reportedly earned about $1 million by betting that the United States would strike Iran by February 28. In a separate case, an Israeli military reservist and a civilian were indicted for allegedly using confidential operational information to wager on security actions last year. Over the past weekend, several Polymarket accounts bet tens of thousands of dollars on the possibility of a US-Iran ceasefire before mid-April, drawing scrutiny from other users.

Views on insider participation diverge. Coinbase CEO Brian Armstrong has argued that informed trading can pull hidden information into prices and improve forecasts. Kalshi CEO Tarek Mansour has taken the opposite stance, saying insider betting undermines a level playing field.

Lawmakers in Washington are reviewing whether government employees and contractors could use nonpublic information to trade on event outcomes. Democratic proposals from Senator Richard Blumenthal and Representative Ritchie Torres would bar participation in markets where a trader has a conflict tied to the subject of the contract.

In a statement, Polymarket’s chief legal officer, Neal Kumar, wrote: “Markets thrive on clarity. These rule enhancements make our expectations abundantly clear for every participant across both platforms and highlight the compliance infrastructure we have already built.”

According to the company, the update standardizes expectations across its global user base and provides clearer reporting pathways. The firm plans to apply the same enforcement principles on both venues.