June 9 (Reuters) - Prediction market Kalshi said on Tuesday it will mandate employment disclosures for users trading on sensitive contracts and launch a whistleblower portal, steps aimed at aligning the platform with regulatory expectations for market integrity.
The move by Kalshi marks a shift toward building institutional-grade infrastructure, as it seeks to address regulatory risks, including concerns over market manipulation and insider trading.
The prediction market operator said the measures, effective immediately, are based on recommendations from an independent Surveillance Audit Committee established to oversee its market integrity and enforcement program.
Prediction markets, which allow users to trade contracts tied to the outcome of future events, have grown popular in recent years, drawing scrutiny from lawmakers over concerns about market manipulation on insider trading on their exchanges.
These markets have been plagued with suspicious trades, with Reuters reporting last week that U.S. federal regulators are investigating whether former congressman George Santos engaged in potential insider trading on Kalshi.
Under the new framework, Kalshi will assign risk scores to markets based on factors such as corporate performance metrics, product launches, outcome concentration, national security implications and the potential for manipulation.
"By implementing these new integrity measures, we continue to lead the industry on the issue of market integrity amongst federally regulated prediction markets," said Robert DeNault, Kalshi's head of enforcement.
The company also introduced new reporting tools that allow users to flag suspicious trading activity directly from market pages. Tips submitted through the platform will be reviewed by a surveillance team that monitors trading activity around the clock.
"For markets with heightened insider or manipulation risk, we now collect employment information before traders can participate," the company said.
Prediction markets like Kalshi and rival Polymarket have drawn global interest and investor capital, allowing them to scale in private while avoiding the intense regulatory scrutiny and reporting complexities associated with public equity markets and traditional exchanges.
(Reporting by Harshita Mary Varghese and Pritam Biswas in Bengaluru; Editing by Arun Koyyur)
