Major Wall Street firms are tightening internal rules around prediction markets as the fast-growing sector attracts more traders, larger volumes and increased regulatory attention.
Goldman Sachs, JPMorgan Chase, Morgan Stanley and Bank of America have updated or clarified employee conduct policies to address the use of event-based trading platforms, according to recent reports. The measures focus particularly on contracts linked to financial markets, politics and other areas where employees could have access to sensitive information.
Goldman Sachs has introduced some of the strictest measures, limiting staff participation in prediction markets that could create real or perceived conflicts of interest. Employees who violate the rules could face disciplinary action, including the loss of profits made from prohibited trades. The bank’s restrictions do not generally apply to lower-risk categories such as entertainment and sports-related markets.
Other major financial institutions have taken a similar approach. JPMorgan, Morgan Stanley and Bank of America already maintain policies designed to prevent employees from using confidential or non-public information for personal gain. Bank of America has reportedly expanded its guidelines with clearer examples involving company-specific events and wider economic developments.
The move comes as prediction markets continue their rapid expansion. Platforms such as Kalshi and Polymarket allow users to trade contracts based on the outcome of real-world events, ranging from elections and economic data to sports results. Their growth has sparked debate over whether some products operate more like financial derivatives or traditional betting markets.
The Commodity Futures Trading Commission (CFTC), which oversees federally regulated event contract markets in the United States, has also been working on clearer rules for the industry. In June, the regulator proposed a new framework for reviewing certain event contracts, including how markets involving gaming-related activities and other sensitive topics should be assessed.
At the same time, prediction market operators are pushing further into mainstream finance. Kalshi has been expanding its range of products and recently sought approval to bring perpetual futures contracts into additional asset categories, including commodities and foreign exchange.
Supporters argue that prediction markets provide useful information by reflecting collective expectations about future events. Critics, however, warn that contracts tied to corporate decisions, government actions or market-moving announcements could create new risks around insider knowledge and manipulation.
For Wall Street banks, the priority is now ensuring that employees do not use access to privileged financial information in a market category that is becoming increasingly difficult to separate from traditional trading.