Goldman Sachs, Morgan Stanley Restrict Staff Prediction Market Trades
Major Wall Street banks are cracking down on employee activity on prediction markets like Polymarket and Kalshi amid rising insider trading concerns.
Goldman Sachs and Morgan Stanley are among the Wall Street banks tightening internal rules around employee participation in prediction markets, as fears of insider trading ripple through platforms like Polymarket and Kalshi, according to a Cointelegraph report. The policy shifts signal a growing recognition by major financial institutions that their staff's access to nonpublic information poses a real compliance risk in these fast-growing wagering venues.
Prediction markets, which allow users to bet real money on the outcomes of political, economic, and world events, have surged in mainstream visibility — particularly following high-profile election-cycle trading. That growth has drawn scrutiny from regulators and now, apparently, from compliance officers inside the largest banks on Wall Street, who are applying the same insider-trading logic long used for equities and derivatives.
Read more Trump Targets 60 Trade Partners With New Sweeping Tariffs →
The concern is straightforward: employees at major financial institutions frequently handle material nonpublic information — whether about corporate deals, economic data, or government policy — that could theoretically be used to gain an edge on outcome-based prediction markets. By restricting or outright banning staff from trading on these platforms, banks are attempting to close a compliance gap before regulators force their hand.
The crackdown reflects a broader institutional reckoning with prediction markets as they evolve from niche curiosities into legitimate financial products. Kalshi, for instance, recently won a legal battle allowing it to offer event contracts in the United States, lending the sector greater regulatory legitimacy while simultaneously raising the stakes for misuse. As these platforms scale, the line between informed speculation and illegal trading on privileged information becomes increasingly difficult to police.
The move by Goldman Sachs, Morgan Stanley, and reportedly other Wall Street firms underscores how quickly prediction markets have forced traditional finance to adapt its compliance infrastructure. Whether formal regulatory guidance will follow remains an open question, but banks are clearly unwilling to wait for Washington to set the rules. Continue reading at Cointelegraph.
