The most popular prediction market app in the United States, Kalshi, has released details on its policy to prohibit access to Politically Exposed Persons (PEPs). In a news release published Wednesday, the exchange outlined its guidelines on banning individuals who may possess sensitive insider information or be otherwise exposed to market manipulation.
“When Members of Congress try to open a Kalshi account, they’re automatically denied as part of Kalshi’s ‘Politically Exposed Persons’ (PEPs) screening,” said Kalshi on Wednesday. The restrictions are similar to what regulated online sportsbook apps have in place on statewide levels.
There are several groups of individuals, and government positions, that are automatically denied access to Kalshi’s platform. These include (but are not limited to):
However, Kalshi’s PEPs restrictions also apply to certain individuals and groups who are associated with local and state governance. These automatic bans encompass:
On a local level, mayors and municipal leaders may be included depending on total population. There’s also a PEPs ban for employees who labor on behalf of state-owned companies.
Prediction market security and surveillance has come under fire in recent months as the public grapples with specific cases linked to market manipulation. In April, federal authorities arrested a US special forces soldier who, according to the DOJ, used a VPN to access Polymarket’s international exchange and predict military outcomes in Venezuela. Unfortunately for other forecasters, the soldier allegedly had insider information that he used to profit over $409,000 through numerous trades.
Separately, Kalshi took administrative action last month when it fined and suspended the accounts of three congressional hopefuls who placed trades on their own elections. All three individuals had their Kalshi accounts banned for five years and received fines ranging from a few hundred dollars to four figures – depending on whether they cooperated with the ensuing internal investigation.
Prediction markets have been eager in recent months to demonstrate that their security measures are broad enough to halt insider trading and market manipulation. In a Senate Commerce Committee hearing on May 20th, Patrick McHenry, a senior adviser for The Coalition for Prediction Markets lobbyist group, spoke before the panel. “Our member companies have enhanced surveillance greater than any casino and greater than any sportsbook in the country,” testified McHenry, a former congressman for North Carolina.
The dominant US-facing prediction market app explained Wednesday that “many of Kalshi’s restrictions extend beyond what the law requires or what standard insider trading laws prohibit.” Kalshi added in its statement that “we follow the law then go the extra mile to do what’s right.”
Loading …
