- Kalshi partners with StarCompliance to launch a platform for monitoring employee trading on prediction markets, aiming to curb insider trading.
- The move comes amid intense legal scrutiny, including a criminal case against a US Army Sergeant accused of earning over $400,000 on Polymarket using classified information.
- A jurisdictional battle is escalating, with the CFTC suing multiple states to assert federal authority over event contracts, which states argue constitute illegal gambling.
Prediction market platform Kalshi partnered with compliance software firm StarCompliance this week to launch a new employee monitoring platform, directly responding to heightened scrutiny over insider trading. This system is designed to flag suspicious employee activity based on transaction patterns and work-hour trading across both onchain and offchain environments.
The launch follows a high-profile criminal case where US Army Master Sgt. Gannon Ken Van Dyke allegedly used non-public military information to earn more than $400,000 on rival platform Polymarket. Consequently, financial firms now face significant pressure to oversee how employees might use sensitive market information on these platforms.
Meanwhile, prediction markets are embroiled in a complex regulatory fight across the United States. At least 11 states have taken action against platforms like Kalshi and Polymarket, creating a patchwork of legal challenges and cease-and-desist orders. The core dispute centers on whether event contracts are gambling or federally regulated derivatives.
The Commodity Futures Trading Commission (CFTC) is aggressively defending its jurisdiction, having sued eight states to block restrictions. For instance, the CFTC joined Kalshi in a legal challenge against Rhode Island and separately sued New Mexico officials last week. “It’s going to be a very heated battle that the courts are going to have to weigh in on,” said Digital Chamber CEO Cody Carbone at a recent conference.
This federal-state conflict could ultimately reach the US Supreme Court. Lawmakers are also intensifying their focus, as Representative James Comer recently demanded information from prediction market CEOs regarding “suspiciously timed trades” related to US military actions.
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