Goldman Sachs has prohibited employees from trading prediction market contracts tied to the bank, elections, financial markets, macroeconomic data, and geopolitics as companies respond to growing insider trading risks on event-based platforms.
Summary
- Goldman Sachs has barred employees from trading prediction market contracts tied to the bank, elections, financial markets, and geopolitical events.
- The move comes as companies face rising pressure to strengthen insider trading safeguards after regulators brought their first corporate prediction market case.
- Google, lawmakers, and state regulators have also tightened oversight of prediction markets as legal and compliance scrutiny continues to grow.
CNBC reported that the investment bank introduced the restrictions as prediction markets face increasing regulatory attention and businesses begin reviewing how employees use nonpublic information on platforms such as Polymarket and Kalshi. A Goldman Sachs spokesperson declined to comment on the policy itself but said the bank prohibits employees from using material, nonpublic information to trade across all markets.
The report said Goldman has become one of the first major companies to introduce explicit prediction market trading restrictions, while many businesses are still deciding whether existing insider trading rules are sufficient or whether separate policies are needed.
Companies weigh insider trading risks
Legal experts told CNBC that prediction markets create new ways for employees with confidential information to profit because contracts can cover a wide range of corporate, economic, and political events. David Oliwenstein, partner and securities enforcement practice lead at Pillsbury, said regulated companies are increasingly asking about regulatory expectations, liability risks and compliance requirements.
Karen Woody, a law professor at Washington and Lee University, told CNBC that the growing number of prediction market contracts makes it difficult for companies to monitor every possible avenue where confidential information could be misused.
The discussion has intensified after U.S. authorities brought what CNBC described as the first insider trading case involving a private company and prediction markets. In May, the Commodity Futures Trading Commission and the Department of Justice charged Google employee Michele Spagnuolo with allegedly using confidential information about the company’s “Year in Search” lists to trade Polymarket contracts, with the CFTC alleging profits of about $1.2 million.
CNBC found that only three of 50 companies it contacted said they already have prediction market policies, while two others said they are reviewing the issue. JPMorgan Chase has advised employees to exercise caution when trading prediction markets, Morgan Stanley confirmed it has related policies in its employee code of conduct, and Bank of America is updating internal guidance for staff, according to the report.
The report further noted that Kalshi and Polymarket have introduced additional compliance tools to detect suspicious trading, although legal experts told the outlet that companies should not rely solely on exchanges and instead develop internal policies and employee training as prediction markets continue attracting regulatory attention.
Prediction markets face mounting scrutiny
Goldman’s policy comes as prediction markets face increasing legal and regulatory pressure in the United States.
Earlier this month, Google updated its Chrome Web Store rules to prohibit browser extensions that facilitate real-money prediction market transactions, with enforcement scheduled to begin on Aug. 1. The policy change followed legal disputes involving platforms such as Kalshi and Polymarket, including ongoing challenges over sports-related event contracts and their treatment under state gambling laws.
Regulatory pressure has also reached lawmakers. In June, House Administration Committee Chairman Bryan Steil said Congress is working to expand a proposed congressional stock trading ban to include prediction market contracts, arguing lawmakers should not trade on elections or public policy outcomes.
State governments have also taken action. In May, the CFTC sued Minnesota after the state passed legislation banning prediction markets from Aug. 1, arguing the measure conflicts with federal oversight of derivatives markets. The regulator said the law could criminalize activity on federally regulated event contracts, while Minnesota has maintained that the state can regulate such markets under its own laws.
