The prediction market is entering a less free zone. Behind the talk of crypto innovation, Kalshi and Polymarket are starting to look a little more like traditional financial platforms, with more control, more oversight and less tolerance for gray areas.
In brief
- Kalshi and Polymarket tighten the screw to calm the regulator.
- The Senate wants to reclassify part of these markets as disguised bets.
- For crypto, the laissez-faire phase is closing.
A rapid response to pressure that has become political
Kalshi and Polymarket are not tightening the screw for nothing. The two crypto platforms are strengthening their defenses against insider trading and manipulation as Washington toughens its tone against prediction markets. A complaint like the one from Massachusetts would now have much less ground. The text shows this clearly, and Kalshi also assumes it in her official announcements.
At Kalshi, change is concrete. The platform says it has implemented technological safeguards to block political candidates, athletes and other sensitive profiles in advance when they want to bet on events they can influence. It also adds an internal reporting tool and highlights its cooperation with IC360 to better filter certain sports markets.
Polymarket, for its part, has clarified what it now considers prohibited. The platform targets betting based on stolen confidential information, illegal tips and positions taken by people capable of directly influencing the outcome of an event. This is not a legal detail. It is a way of responding to a criticism that has become central: that of a market where informational advantage can quickly turn into abuse.
The Senate wants to close a breach
The real news is here. The US Senate no longer views these markets as a technological curiosity. Adam Schiff and John Curtis presented on March 23, 2026 the Prediction Markets Are Gambling Act, a bipartisan text which aims to prevent entities registered with the CFTC from listing contracts that resemble sports betting or casino games.
The political message is simple. For the authors of the text, these contracts are not sophisticated products of collective information. These are, in fact, bets offered at the federal level in all fifty states, sometimes bypassing local gaming frameworks, consumer protections and even certain tribal prerogatives. It is precisely this gray area that the Senate wants to reduce.
This debate therefore goes beyond Kalshi and Polymarket. It poses a more serious question: how far can a prediction market go before being considered a betting site dressed up as a financial product? As long as this border remained blurred, the platforms could move forward quickly. As soon as it becomes political, their room for maneuver suddenly shrinks.
Regulation is moving forward, and the crypto argument will not be enough
The CFTC itself has opened the door to tighter supervision. In its document published in March, the regulator explicitly questions the vulnerability of these contracts to manipulation, wash trades, disruptive practices and surveillance problems in prediction markets, including when they are based on blockchain. This shows one thing: the subject is no longer marginal. It is now treated as a market structure problem.
For the crypto ecosystem, the signal is clear. Simply using onchain transparency or a decentralized architecture no longer protects a platform from being required to comply. Polymarket highlights this transparency, Kalshi emphasizes its filtering tools, but neither can avoid the heart of the problem: when a market is based on sensitive information, the risk of asymmetry becomes political, legal and reputational.
In reality, this sequence perhaps marks the end of an illusion. Prediction markets have long wanted to present themselves as machines for aggregating information. The Senate now views them as products capable of encouraging speculation on events that can be influenced. Crypto or not, the logic that imposes itself becomes classic: the more the market grows, the more control increases. And the more it touches on sport, politics or war, the more regulatory tolerance drops. Meanwhile, bitcoin is making headway despite declining volume.
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