Concerns about insider trading in prediction markets have intensified after a series of high-profile bets on geopolitical events, prompting fresh questions about whether it is even feasible to curb such practices in the growing industry sector.
Preventing insider trading is only realistically possible in prediction markets that employ Know Your Customer (KYC) measures, according to Austin Weiler, research analyst at blockchain research firm Messari.
“For KYC’d platforms, the most effective mechanism is to limit users’ access to certain markets in advance,” Weiler told Cointelegraph, adding that state actors could be restricted from accessing political or geopolitical markets.
“This does not completely eliminate abuse, as insiders can still share information with third parties, but it adds an important barrier and raises enforcement standards,” he noted.
The problem with non-KYC prediction markets
For non-KYC or fully onchain prediction markets, enforcement is extremely challenging and, in some cases, “almost impossible,” Weiler said.
When wallets aren’t linked to real-world identities, there’s no reliable way to identify merchants or determine whether they have access to material non-public information (MPNI), he said.
“Prediction markets may attempt to monitor unusual trading behavior, limit trade sizes, or slow trading during sensitive geopolitical periods. However, these measures are easily circumvented,” Weiler said, adding:
“Banning targeting government officials is only realistically enforceable in KYC-based systems. While all onchain activity is transparent, transparency alone does not solve the attribution problem. Without identity verification, it is extremely difficult to confidently link an onchain wallet to a specific official, government actor, or insider.”
Kalshi, Polymarket, Opinion: Who needs KYC and how?
At the time of writing, KYC requirements vary widely among established prediction platforms such as Kalshi and Polymarket, while decentralized alternatives do not appear to require identity checks or are technically unable to support them.
Kalshi implements KYC requirements as part of its regulated model under the authority of the US Commodity Futures Trading Commission. On its login page, Kalshi states that it is requires basic personal data of the user and can request further verification using an identification document.
Polymarket applies KYC to its US-based users, while non-US versions of the platform operate without mandatory identity checks, with access allegedly available via VPN, according to to social media reports. The platform does not publicly confirm this in its user guide.
Opinion, a decentralized prediction market backed by YZi Labs, a company associated with former Binance CEO Changpeng Zhao, provides no public information on KYC requirements.
Cointelegraph reached out to Kalshi, Polymarket and Opinion for comment regarding the KYC requirements, but did not receive a response at the time of publication.
Related: Tennessee sends cease and desist letters to Kalshi, Polymarket, Crypto.com
The news comes amid intense scrutiny of major prediction market platforms following high-profile bets linked to geopolitical events in Venezuela, including reports of an anonymous trader who turned $30,000 into more than $400,000 just hours before US forces captured former Venezuelan President Nicolás Maduro.
Some US lawmakers, including Rep. Ritchie Torres, have supported legislation including the Public Integrity in Financial Prediction Markets Act of 2026, which aims to prohibit government officials from trading in prediction markets when they possess material non-public information.
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