Kalshi and Polymarket moved Monday to tighten their prediction-market rules on insider trading and event-influence trading shortly after two U.S. senators introduced legislation they say could sharply limit the industry. Kalshi said it would add bans aimed at political candidates trading on their own campaigns and would also block people involved in college or professional sports from trading contracts tied to the sports they play or work in.
In a separate set of changes, Polymarket rewrote its rules to make clear that users cannot trade on contracts where they might possess confidential information or where they could influence the outcome of an event. Polymarket’s update said that would include athletes and also could extend to other people with enough influence to affect an event’s result or to know information in advance.
Kalshi said in a statement that its new features “further demonstrate our commitment to safe markets,” according to the Associated Press report. Polymarket chief legal officer Neal Kumar said in a statement that the platform’s rule changes “make our expectations abundantly clear for every participant across both platforms,” referring to the additions on both the Kalshi and Polymarket sides.
The platform updates arrived as Sen. Adam Schiff, a Democrat, and Sen. John Curtis, a Republican, announced legislation called the “Prediction Markets are Gambling Act.” The bill would ban prediction markets from creating contracts related to sports, a change Schiff and Curtis argued would curb what critics view as gambling-like activity.
The AP report said the restriction could affect Kalshi and Polymarket’s growth and business prospects because much of the industry’s recent expansion has been in sporting events. The report also said both companies have signed business deals with sports teams and leagues to build credibility with fans.
Schiff and Curtis’ bill also drew attention to how politically split skepticism toward prediction markets has become. Several states have preemptively banned Kalshi and Polymarket and characterized the platforms as sports betting with a technology twist, while Kalshi has tried to sue in states such as Nevada and Utah, according to the report.
The AP story also noted that Polymarket has faced intense criticism after some users placed large bets ahead of military action in Iran and Venezuela earlier this year, with the bets appearing to profit from knowledge of the actions in advance. Polymarket’s latest rules explicitly targeted trading by people with confidential information or by those able to influence outcomes—changes that directly track that criticism.
The Associated Press report said the platforms have backing from the Trump-controlled Commodity Futures Trading Commission, with CFTC chairman Michael Selig indicating he would support Kalshi in legal battles at the state level. The report said Selig has argued that federal law preempts state law on the issue.
The senator-backed bill and the platforms’ compliance moves also come as Polymarket and Kalshi navigate attention around politics and investment connections. The AP report said President Donald Trump’s son, Donald Trump Jr., has invested in Polymarket through his venture capital firm and is a strategic adviser for Kalshi.
At the same time, the report said Utah has been particularly aggressive in seeking to keep Kalshi and Polymarket out of the state, citing an effort by Gov. Spencer Cox to expand Utah’s definition of gambling to include “prop bets.”
If enacted, Schiff and Curtis’ federal sports-contract restriction would “substantially destroy” much of Kalshi and Polymarket’s future business prospects, the AP report said, describing the legislation as a potential turning point for the two platforms.