Wall Street Banks Restrict Prediction Market Trading over Insider-Risk Fears

Wall Street banks are restricting employee trading on prediction market platforms due to fears that they may use nonpublic information to trade event contracts.

Goldman Sachs has reportedly banned its employees from trading on event contracts that are specific to the bank, including financial markets, macroeconomic events, elections and geopolitics, CNBC reported, citing people familiar with the matter.

Unnamed sources from Morgan Stanley also told CNBC that the bank has policies regarding prediction market trading by employees, while a spokesperson for Bank of America said the bank was in the process of issuing new prohibitive measures for employees on prediction market trading.

The report adds to insider trading fears around prediction markets, which attracted the attention of the White House and US lawmakers, who proposed legislation aimed at restricting political prediction market trading by government officials. 

Cointelegraph approached Goldman Sachs to ask what triggered the preventive policies. A spokesperson for the bank declined to comment.

In May, the US Justice Department and the Commodities Futures Trading Commission (CFTC) said that Google software engineer Michele Spagnuolo profited $1.2 million on Polymarket after accessing nonpublic information at work.

On June 18, Wisconsin Representative Bryan Steil introduced a law to prevent certain public officials from “wagering on public policy issues and political outcomes,” but didn’t mention lawmakers in the White House.

One major flashpoint arose in January, when a soldier allegedly made more than $400,000 betting on the removal of Venezuelan President Nicolás Maduro, who was ousted and captured by US forces.

Related: Suspected insider wallets rack up $1.2M betting on ZachXBT’s Axiom exposé

Polymarket seeks broader US access

Meanwhile, Polymarket is seeking regulatory approval to offer margin trading for US users, which would enable them to bet on events with less capital upfront.

The prediction market filed an application to become a futures commission merchant through its affiliate, Coming Home GBA LLC, according to a July 3 filing with the National Futures Association (NFA).

The filing marks Polymarket’s latest attempt to expand its US footprint and attract more users. Cointelegraph approached Polymarket for comment on the matter. The platform also needs authorization from the CFTC to allow non-fully collateralized trading for users. 

Polymarket’s main rival already received US regulatory approval to provide margin trading, after its affiliate, Kinetic Markets LLC, received an NFA authorization in March.

Coming Home GBA LLC, filing. Source: nfa.futures.org 

Polymarket reached a record $713 million in daily taker volume on June 20, according to Dune data. The milestone came more than a week after the World Cup kicked off on June 11.

Kalshi also posted a record monthly trading volume of nearly $9.4 billion in June, as the 2026 FIFA World Cup fueled activity across prediction markets.

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