Kalshi To Implement Employer Verification For Certain Contracts

After recent allegations of insider trading on prediction markets, Kalshi announced new regulations this week mandating that some users reveal their employers.

The decision came after an advisory committee recommendation for improved security measures to better deal with possible insider trading and manipulation, according to the Wall Street Journal.

As part of the plan, some markets linked to material nonpublic information would require traders to reveal their place of employment, Kalshi said. The requirement is expected to be unveiled in the coming weeks.

The types of markets that could require the employment disclosure would include those related to company performance and national defense. Some of those markets have drawn criticism of insider trading in recent months.

Those have included the removal of Venezuelan leader Nicolás Maduro by U.S. forces., the future of Iranian Supreme Leader Ayatollah Ali Khamenei, and Google search markets.

The committee’s report said that the company’s current data-collection system generally meant a manual review using publicly available information once a market had closed. Adding employment information could bolster “market surveillance analysis, early-stage investigative review, and deterrence,” according to the report.

Sportsbook Companies Struggling As Prediction Markets Grow

The added regulation comes as Kalshi has battled several states in court over the last year. State gaming regulators allege that platforms like Kalshi and Polymarket offer sports event contracts that circumvent gaming laws.

Prediction firms argue that their offerings are different from traditional sports betting and solely regulated by the Commodity Futures Trading Commission (CFTC) at the federal level and not by state gaming regulators.

Polishing prediction markets’ image in regard to insider trading could possibly make the industry more reputable in the eyes of the public and regulators. This could potentially push more business away from traditional sportsbooks.

Traders Profit On Plummeting Sportsbook Stocks

Hedge funds and other stock traders have been cashing in on that customer shift already. A recent report found that these groups have made $2.3 billion by short-selling stocks of top U.S. and European online gambling companies this year.

The DraftKings stock price has fallen from a high of about $48 in August to a close of $30.02 on Tuesday. FanDuel parent company Flutter Entertainment’s stock price traded at about $307 in late August and closed at $110.80 on Thursday.

The losses in value at DraftKings comes after a recent social media clash between DraftKings co-founder Matt Kalish and professional sports bettor and poker player Haralabos Voulgaris highlighted the company’s financial picture.

The discussion focused on a new law in Massachusetts requiring sportsbooks to disclose why certain customers had gotten their action limited. However, Voulgaris also looked at DraftKings’ financial picture, noting that the company has a cumulative net loss of about $6.4 billion.

In addition to falling revenue and stock prices, the competition with prediction markets could affect jobs at sports betting companies. FanDuel recently went through a third round of layoffs in less than a year, according to Front Office Sports. The company let go of a few hundred employees.

“While decisions like this are never easy, these changes will strengthen our ability to execute on our long-term strategy,” the company said.

Major Tax Implications For States

Beyond seeing sportsbooks taking a financial hit, the rise of prediction markets could mean reduced tax revenue for states. The Tax Policy Center recently looked at this shift and concluded that even small movements in user habits toward prediction markets could have a huge impact on state revenue.

The reports looked at New York as an example. The state brought in $1.3 billion in taxes for fiscal year 2026 via online sports betting. A 1% drop in revenue would mean losing out on $13 million while a 5% drop could cost the state $66 million. A 10% drop would mean a reduction in state revenue of $130 million.

“These losses matter not just because of their size but their effects on budget flexibility,” the report said. As one state budget director put it, ‘The most important million is the last million in doing budgets.’”