Prediction Marketplace Kalshi has partnered with compliance software provider StarCompliance to launch a monitoring platform designed to lend a hand financial firms oversee employee activity in prediction markets as the sector faces increased scrutiny over insider trading and the utilize of non-public information.

According to Wednesday’s announcement, the system will flag employee activity based on transaction volume, transaction patterns, market categories and activity during working hours, while providing companies with a centralized way to manage investigations and audit documentation related to predicting market exposure in onchain and offchain environments.

The ruling comes days after a federal judge set a December trial date for Sgt. US Army. Gannon Ken Van Dyke, who prosecutors say used nonpublic information about a military operation targeting Venezuelan President Nicolás Maduro to make more than $400,000 on the forecasting marketplace Polymarket. Van Dyke pleaded not guilty to the charges.

StarCompliance said the product aims to eliminate potential risks associated with material non-public information, as employees of financial firms may be able to utilize sensitive business or market information to enter into contracts for trading events.

The modern monitoring feature expands StarCompliance’s existing employee compliance platform, which already tracks activity in established securities and digital assets, with predictive market trading via Kalshi.

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Prediction markets face increasing scrutiny from regulators and lawmakers

The launch comes as prediction markets come under increasing scrutiny in the United States, where at least 11 states have taken legal or regulatory action against platforms like Kalshi and Polymarket.

At the center of the dispute is whether event contracts should be regulated under state gaming laws or as federally regulated derivatives overseen by the Commodity Futures Trading Commission (CFTC).

The conflict has created a patchwork of lawsuits, cease-and-desist orders and proposed regulations. Nevada became the first state earlier this year to temporarily block Kalshi’s operations, while Arizona accused the company of operating an illegal gambling business by offering party contracts to state residents.

Prediction market operators and the CFTC backed down. In tardy May, Kalshi sued Minnesota after the state passed what CFTC Chairman Michael Selig described as the nation’s first outright ban on prediction markets. Around the same time, the CFTC joined Kalshi in a separate legal action against Rhode Island state officials over the regulation of event contracts.

Last week, the CFTC sued New Mexico officials after the state accused Kalshi of offering unlicensed sports betting. The case was the eighth state targeted by the agency in its effort to block state-level restrictions on prediction marketplace platforms.

Last month, Rep. James Comer asked the CEOs of Kalshi and rival Polymarket for information on their responses to insider trading following “suspicious timing transactions” related to U.S. military actions against Iran.

Source: Representative James Comer

A fight over jurisdiction in the prediction market could reach the Supreme Court

Speaking on a panel at the Bitso Stablecoin conference in Mexico on June 16, CEO of industry advocacy group Digital Chamber Cody Carbone said the dispute between federal regulators and state authorities is likely to play out over the next few years. He said:

This promises to be a very fierce fight that will have to be decided by the courts.

The advocacy director said the Trump administration broadly supports Selig’s efforts to position the CFTC as the primary regulator of prediction markets, although he expects ongoing disputes with state gaming regulators will ultimately reach the U.S. Supreme Court.

He added that U.S. lawmakers are also debating what types of event contracts should be allowed, including in political and war-related markets, while issues related to insider trading are likely to remain a focus of future legislation and regulatory oversight.

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