Several leading Wall Street banks have imposed stricter controls on their employees’ participation in prediction markets, citing concerns about conflicts of interest and the mishandling of nonpublic information. Goldman Sachs, Morgan Stanley, JPMorgan Chase, and Bank of America have all revised their policies to prohibit trading on contracts related to bank-specific occurrences, elections, macroeconomic indicators, and financial markets.
These changes come amid growing scrutiny of prediction markets, platforms where users bet on outcomes ranging from political elections to economic trends. Inside financial institutions, employees often have early access to sensitive information such as deal flow, client activity, or market-moving decisions, which, if used in prediction markets, could lead to insider trading violations. Violations of these new policies can result in disciplinary actions, including termination and the seizure of profits from prohibited trades.
The tightening of internal rules aligns with recent regulatory and legislative developments targeting prediction markets. The Commodity Futures Trading Commission (CFTC) has issued advisories highlighting risks associated with market manipulation and insider trading on these platforms. Notably, the CFTC has penalized individuals for trading on nonpublic information related to their own engagements with prediction markets, including a political candidate trading on his own campaign and a media professional trading linked to his affiliated channel.
On the legislative front, the U.S. Senate unanimously enacted a ban on senators, officers, and staff from participating in prediction markets, emphasizing the potential for inside information to be monetized unfairly. Industry players such as Polymarket have expressed support for these measures, claiming their internal rules already prohibit such conduct. Kalshi, a major prediction market operator, views the regulatory push as a way to establish clearer standards across the sector.
Further enforcement actions have extended beyond financial firms. In a high-profile case, the Department of Justice and the CFTC charged a Google employee with profiting from prediction market trades related to Google’s “Year in Search” lists, spotlighting the broader risks of information misuse in these platforms.
Financial institutions now face ongoing pressure to enhance compliance frameworks, ensuring employees do not exploit prediction markets with inside information, preserving market integrity and aligning with evolving regulatory expectations.