Wall Street Banks Crack Down on Prediction Market Trades

Dr. Annelies De Vos · 2026-07-10

Several major Wall Street banks have introduced or updated internal rules governing employee participation in prediction markets as concerns grow over potential conflicts of interest and the misuse of confidential information. Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America have all taken steps to address employee activity involving event-based contracts offered by platforms such as Kalshi and Polymarket, according to people familiar with the companies' policies. Prediction markets allow users to trade contracts tied to possible outcomes of real-world events. Think of them as a stock exchange for betting on whether something will happen. For example, you might buy a contract that pays out if the Federal Reserve raises interest rates by a certain amount, or if a specific political candidate wins an election. These markets have exploded in popularity, attracting both casual traders and institutional investors. ### Why Banks Are Stepping In The concern for banks is simple: employees might use inside information to trade on these markets. If a banker knows a company is about to announce a merger, they could profit by betting on that outcome before the news goes public. That's illegal insider trading, and it exposes the bank to regulatory fines and reputational damage. Banks are now updating their codes of conduct to explicitly ban such activity, even if it happens outside normal trading hours or on personal devices. ### What the New Rules Look Like Each bank has tailored its approach, but common themes have emerged. Here are the key restrictions being implemented: - Employees must get pre-approval before trading in any prediction market contract. - Trading in contracts related to financial markets, economic data, or specific companies is banned outright. - Personal accounts used for prediction market trading must be disclosed to compliance teams. - Any profits from unauthorized trades could be forfeited, and employees face disciplinary action up to termination. ### The Rise of Kalshi and Polymarket Platforms like Kalshi and Polymarket have made prediction markets accessible to everyone. Kalshi, based in New York, offers contracts on everything from inflation rates to sports outcomes. Polymarket, built on blockchain technology, lets users trade on political events and entertainment awards. These platforms are regulated differently than traditional stock exchanges, which creates a gray area for bank employees. While some contracts might seem harmless, banks worry that even casual bets could be seen as a conflict of interest. ### A Quote from a Compliance Expert "The lines between personal betting and professional disclosure have blurred," says a senior compliance officer at a major New York bank. "We're telling our people: if you have access to non-public information, you cannot trade on it anywhere, even on a prediction market. It's that simple." ### What This Means for Traders If you work at a Wall Street bank, your freedom to dabble in prediction markets is shrinking fast. Compliance teams are monitoring these platforms more closely, and some banks have even blocked access to them on company networks. The message is clear: your job is worth more than a few hundred dollars in bets on the next Fed meeting. ### Looking Ahead As prediction markets continue to grow, expect more financial firms to follow suit. Regulators are also paying attention. The Commodity Futures Trading Commission (CFTC) has already signaled that it may treat certain prediction market contracts as futures or swaps, bringing them under stricter oversight. For now, if you're in the banking world, the safest bet is to avoid these markets altogether. Remember, the rules are meant to protect both the bank and its employees. A few minutes of fun on a prediction platform isn't worth risking your career over. Stay informed, stay compliant, and keep your trading within the boundaries your employer sets.