Polymarket has revised its trading rules, adding tighter controls as prediction markets draw closer attention from regulators and competitors. The company announced the updated standards apply across both its decentralized finance platform and its regulated U.S. exchange, with a focus on clearer boundaries for trading behavior.
The new rules now sit inside the Terms of Use for its DeFi product and the formal rulebook for its U.S. exchange. Together, they give more direct guidance on what traders are allowed to do, especially when sensitive or nonpublic information is involved. It comes as Polymarket was criticized after a bet on the Venezuelan President Nicolas Maduro resulted in a $400,000 cashout.
“Markets thrive on clarity,” said Neal Kumar, Chief Legal Officer of Polymarket. “These rule enhancements make our expectations abundantly clear for every participant across both platforms and highlight the compliance infrastructure we have already built. As Polymarket continues to scale, we will build on our foundation with clear communication to Polymarket’s users to ensure our markets do what they do best — surface truth.”
Polymarket enforces stronger guardrails around insider trading
Prediction markets let users trade on the outcome of real-world events, which creates a risk that people with advanced or privileged information could gain an unfair advantage.
Polymarket now spells out three categories of banned activity. Users cannot trade on stolen or improperly obtained confidential information tied to an event’s outcome. Acting on illegal tips is also prohibited when the recipient knows, or should know, the information was shared in breach of trust. People who can influence an outcome are barred from trading on related contracts.
The company has also added clearer reporting channels. New Market Integrity pages explain how the rules work in practice and where users can flag suspicious activity.
The policy also targets wider manipulation tactics. Spoofing, wash trading, fictitious transactions, and front-running are all banned under the revised framework.
These changes track a wider change across the prediction market industry. Platforms such as Kalshi have also moved to define insider trading limits more explicitly, while lawmakers have introduced proposals like the “Bets Off Act,” which would restrict certain political betting markets tied to government outcomes.
Enforcement differs by platform but follows a similar structure. On the DeFi side, trades are recorded on the Polygon blockchain, which makes activity publicly visible. The company reviews that data and works with outside surveillance firms to flag unusual patterns. It may investigate accounts, block wallet addresses, or refer cases to law enforcement when needed.
On its U.S. exchange, Polymarket uses real-time monitoring, outside surveillance partners, and a Regulatory Services Agreement with the National Futures Association. That allows for trade reviews, investigations, and enforcement actions. Penalties can include account suspensions, financial sanctions, or referrals to regulators. DeFi participants can raise issues through Discord or email, while U.S. users can file confidential reports through a dedicated address.
Featured image: Polymarket / Grok
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