Concerns about insider trading in forecasting markets have heightened after a series of high-profile bets on geopolitical events, raising recent questions about whether it is even possible to curb such practices in the burgeoning industry.
According to Austin Weiler, a research analyst at analytics firm Messari, preventing insider trading is only realistically possible in prediction markets that employ Know Your Customer (KYC) measures.
“For KYC platforms, the most effective mechanism is to pre-limit user access to specific markets,” Weiler told Cointelegraph, adding that state entities could be restricted to political or geopolitical markets.
“This does not fully eliminate abuse, as insiders can still share information with third parties, but it represents a significant obstacle and raises law enforcement standards,” he noted.
The problem with non-KYC prediction markets
For non-KYC or pure on-chain prediction markets, enforcement is extremely hard and in some cases “almost impossible,” Weiler said.
If wallets are not linked to real-world identities, there is 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, cap trade volume, or slow trading during sensitive geopolitical periods. However, these measures can be easily bypassed,” Weiler said, adding:
“Bannings targeting government officials are only realistically enforceable in KYC-based systems. While all on-chain 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 entity or insider.”
Kalshi, Polymarket, Opinion: Who requires 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 or technically support identity checks.
Kalshi enforces KYC requirements under its regulated model under the supervision of the U.S. Commodity Futures Trading Commission. On the registration page, Kalshi states that yes requires basic personal data of users and may request further verification using an identification document.
Polymarket applies KYC to its US users, while non-US versions of the platform operate without mandatory identity checks and access is reportedly possible via VPN, According to to reports on social media. The platform does not publicly confirm this with its user guide.
Opinion, a decentralized prediction marketplace powered by YZi Labs, a company associated with former Binance CEO Changpeng Zhao, assures no public information on KYC requirements.
Cointelegraph reached out to Kalshi, Polymarket and Opinion for comment regarding KYC requirements but had not received any response at the time of publication.
Related: Tennessee sends cease and desist letters to Kalshi, Polymarket, Crypto.com
The news comes after close scrutiny of major forecasting market platforms following high-profile bets linked to geopolitical events in Venezuela, including reports of an anonymous investor turning $30,000 into more than $400,000 hours before US forces captured former Venezuelan President Nicolás Maduro.
Some U.S. lawmakers, including Rep. Ritchie Torres, have supported legislation, including the Public Integrity in Financial Forecast Markets Act of 2026, which aims to prevent government officials from conducting business in forecast markets if they have material nonpublic information.
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