Who Wins; Who Loses?
I have previously blogged about the expansion of prediction markets and its effects on the population. Bettors can bet on virtually anything. For example, Will the U.S. invade Iran before 2027? The Iran war is a popular source of betting. Prediction market traders on Polymarket and Kalshi have placed hundreds of millions of dollars in bets on the outcome of the 2026 Iran War.
How the Markets Work
Prediction markets are open exchanges online where people wager on future events, from election dates to economic outcomes. Participants can bet on anything from the price of an asset to how many times a public figure will tweet in a day, to the start or end of a war. Each bet shifts the market odds, which in turn reflect what participants collectively believe is most likely to happen. Prediction markets can be used for forecasting everything from election results to sports events.
Prediction markets are booming in popularity and facing scrutiny amid reports of market manipulation and insider trading. In the U.S., most betting, be it on prediction markets or on sports apps, is on the outcomes of sporting events. Indeed, betting on sports accounts for between 85% and 90% of the total betting volume on U.S. prediction markets.
Prediction markets have expanded significantly in the U.S., including through exchanges regulated by the Commodity Futures Trading Commission (CFTC). However, the regulatory treatment of some contracts—particularly those tied to sports—remains contested.
Each Polymarket is a yes/no question, like “Will Putin meet with Zelenskyy by December 31, 2026?”. You buy shares in “yes” or “no” outcomes. Prices reflect crowd-sourced odds and probabilities. For example, if yes is at 30 cents, that’s a 30% chance. Markets resolve based on official results. For multi-outcome events, like “Nobel Peace Prize Winner 2026,” you simply trade on the specific outcome you think will win.
Combined monthly trading volume on Kalshi and Polymarket reached approximately $24 billion earlier in the year and surged to record-breaking weekly and quarterly highs (such as $188 billion in Q3 2026), heavily propelled by sports and regulated U.S. expansion.
Problem of Insider Trading
It has been reported that Insider Trading has drawn sharp criticism of traditional financial markets for giving those with privileged access to information an edge over everyday investors. Executives or employees often hold details unavailable to the public, allowing them to buy or sell stocks ahead of major announcements.
Kalshi or Polymarket disrupts the workplace by turning confidential internal data into financial casino chips, creating novel insider trading and compliance risks.
Insider trading & confidentiality leaks create potential manipulation of the markets and losses to unsuspecting bettors, and those without access to insider information. Here are some problems with insider trading that employers must be concerned about.
- Misappropriation of Data: Employees use non-public workplace knowledge—such as upcoming product launch delays, layoffs, or executive changes—to bet on event contracts.
- Blurred Legal Lines: Traditional corporate compliance policies often only cover public stock, leaving employees unaware that betting on internal milestones violates trust or fiduciary duties.
- Regulatory Scrutiny: The CFTC and lawmakers treat trading on material non-public information (MNPI) via prediction apps as illicit misconduct, which can drag an employer into federal investigations.
There’s also potential and reputational fallout:
- Negative Publicity: Public reports linking suspicious market bets to specific corporate leaks cause immediate reputational damage and a loss of trust from clients or investors.
- Productivity Drains: Employees monitoring live odds or trading portfolios during work hours experience distracted focus and lower output.
- Disciplinary Crisis: Companies are forced to investigate, fire, or legally discipline staff exploiting proprietary data for personal wagers.
What Can Employers Do?
As online prediction markets grow, employers may need to review whether workplace policies address the use of confidential information in event-based betting markets.
I consulted AI and came up with the following mitigation steps.
- Expand your corporate insider trading and code-of-conduct guidelines to explicitly ban event-contract wagering using company data.
- Block access to popular prediction platforms on company-owned hardware and networks during working hours.
- Train staff about what constitutes confidential information under the new digital betting landscape.
Employers can control employee betting on prediction markets by updating compliance policies, blocking platform access on company networks, and enforcing strict disciplinary rules.
In June 2026, the CFTC proposed a rule to create a more structured framework for evaluating whether prediction market contracts are contrary to the public interest. Recent compliance policy reforms by prediction market platforms indicate that these operators are preparing for a more heavily regulated environment, such as Kalshi’s announcement that it has developed a framework to address insider trading and manipulation concerns for certain types of business industries.
Involving HR in Compliance
Writing for the online publication, “HR Morning,” Kayla McDaniel, says it is important for HR teams to begin compliance by reassessing whether the company’s existing confidentiality, insider trading, ethics, conflicts of interest and acceptable use policies adequately address prediction markets and event contracts.
Employers should consider adding clear language prohibiting employees from using any confidential information for personal wagers or trades, regardless of whether that information would qualify as traditional material nonpublic information (MNPI).
HR should partner with legal, compliance and business leaders to identify higher-risk roles and functions within the company, including employees with access to sensitive customer data, product timelines, regulatory developments, government contracts, workforce changes, M&A activity, cybersecurity issues or clinical and research information.
To identify these roles, employers should consider targeted restrictions, pre-clearance requirements, disclosure obligations, or attestations tailored to the organization’s industry and risk profile.
HR should also incorporate prediction-market risks into employee training and onboarding. Training should explain what prediction markets are, give concrete examples of prohibited conduct, and reinforce that company and client information may not be used for personal financial gain.
Finally, employers should also document compliance expectations in handbooks, training materials, and employee certifications, while reviewing whether company devices and systems should be restricted from accessing prediction-market platforms. These steps can help employers’ close policy gaps, reduce regulatory and reputational risk, and show that they are responding proactively to an emerging compliance issue.
The View of the Public About Dangers of Predictions Betting
According to a recent Harris Poll conducted on behalf of the National Council on Problem Gambling (NCPG), nearly half of Americans (45%) say prediction markets are comparable to gambling while 27% say they are most similar to investing. 85% of Americans agree people can develop unhealthy or addictive behaviors related to prediction market platforms, while 84% believe these platforms should be treated similarly to gambling when it comes to consumer protections.
The survey additionally found that 86% of Americans agree that prediction market platforms involve financial risk similar to other forms of gambling; however, only 56% of Americans say they would know where to go for help if they or someone they know developed a problem related to prediction market use.
You can get immediate, confidential help for prediction market addiction by calling or texting the National Problem Gambling Helpline at 1-800-MY-RESET or calling 1-800-GAMBLER
Blog posted by Steven Mintz, PhD, professor emeritus from Cal Poly San Luis Obispo on October 7, 2026. You can contact Dr. Mintz at: smintz@calpoly.edu. Learn more about Steve’s activities by visiting his website.