Goldman Sachs has barred employees from trading prediction market contracts tied to the bank itself as well as elections, financial markets, macroeconomic data and geopolitics, reflecting broader concern among companies about insider trading risks on event-based platforms. The move comes as businesses face rising scrutiny over whether employees could use material, nonpublic information to profit from contracts listed on prediction markets. In May, the Commodity Futures Trading Commission and the Department of Justice charged Google employee Michele Spagnuolo with using confidential information to trade Polymarket contracts related to Google's "Year in Search" lists, in what authorities described as the first event-contract insider trading case involving a private-sector company.
Lawyers and compliance specialists say prediction markets create new challenges because they offer a wide range of contracts that can be linked to internal corporate information. Karen Woody, a law professor at Washington and Lee University, said the variety of questions available for trading makes enforcement difficult, while David Oliwenstein of Pillsbury said regulated companies are increasingly seeking guidance on expectations, risks and potential liability. Woody also said the CFTC has a "blank canvas" in pursuing such cases, underscoring how new the regulatory terrain remains.
Corporate responses appear uneven. Among 50 public and private companies contacted by CNBC that had contracts related to their businesses on prediction platforms, only three said they already had policies addressing such trading and two said they were reviewing the issue. Morgan Stanley said its employee code of conduct covers prediction market trading, while JPMorgan Chase has urged caution, especially on financial-sector contracts. Bank of America is communicating policy updates that will define prohibited activity, and United Airlines said its existing guidelines already ban using company information for personal gain. Legal experts and some company representatives argue that broad insider trading rules already apply to these platforms, but others, including Smarsh advisor Tiffany Magri, say explicit references to prediction markets help set clearer expectations for employees.
The platforms themselves have begun adding compliance tools. Kalshi introduced employment verification tools for some markets and partnered with StarCompliance and Solidus Labs to strengthen employer oversight and trade surveillance. Polymarket cited partnerships with Chainalysis and Palantir aimed at detecting suspicious activity. Even so, some experts argue those measures are only a starting point. They contend companies should update internal policies, train staff and in some cases consider stricter controls such as blocking access on company devices or limiting trading during work hours, as employers and regulators adapt to a fast-growing market with few established precedents.
