Polymarket tightens trading rules as Iran bets draw scrutiny
Table of contents
- Polymarket has introduced enhanced market integrity rules across its DeFi platform and its CFTC-regulated US exchange.
- The update prohibits trading on stolen confidential information, illegal tips, and by those with authority to influence an event’s outcome.
- The announcement coincides with scrutiny over suspiciously timed bets on geopolitical events, including the US-Iran conflict.
Prediction market platform Polymarket has updated its rules to prohibit trades based on stolen confidential information or illegal tips, as well as trading by those who hold a position of authority or influence that may affect the outcome of a relevant event.
The changes, announced on Monday, apply to Polymarket’s global blockchain-based platform and its Commodity Futures Trading Commission (CFTC)-regulated US exchange, and are now published on a new dedicated Market Integrity page on their site.
What the rules cover
Under the new framework, users cannot trade if they hold stolen confidential information tied to an event outcome, or if they act on illegal tips passed along by someone with a duty of trust or confidence.
Polymarket also prohibits those with enough authority or influence to affect an outcome from trading contracts tied to that event. The company gave a straightforward example in its public materials: a member of Congress should not be trading on a contract linked to specific legislation.
Neal Kumar, Chief Legal Officer of Polymarket, said:
“Markets thrive on clarity. 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.”
Both platforms already prohibited a broad range of disruptive conduct, including fraud, wash trading, spoofing, front-running, and market manipulation. The new Market Integrity pages centralise those existing rules and add dedicated channels for users to report suspicious activity.
Scrutiny builds
The timing is not coincidental. Per on-chain analytics, ten wallets with no prior transaction history were created on the same day and collectively staked $160,000 on a US-Iran ceasefire by end of March, eyeing a potential payout of over $1,000,000.
Analysts described the wallets as resembling those of someone with inside information. The apparent splitting of positions across multiple accounts raised further concern, though no insider trading has been confirmed.
Trading activity across US-Iran-related contracts on Polymarket ran into the hundreds of millions of dollars, according to available platform data.
Separately, a user reportedly positioned for a return of over $550,000 on contracts tied to the fate of Iran’s Supreme Leader, Ayatollah Ali Khamenei, shortly before his death was confirmed.
The new rules represent a notable change of tone from Polymarket’s founder. Speaking at the Axios BFD Summit in November, Shayne Coplan had argued that insider trading on his platform could improve price accuracy rather than harm it. He went on to suggest that informed traders pulling private information into the market was a feature, not a flaw.
Monday’s announcement draws a clearer line between that philosophical position and the platform’s actual conduct rules.
Rival platform Kalshi also announced new measures on the same day, introducing preemptive screening to block athletes and politicians from trading on sports and political markets related to their own activities. That is a step up from its prior policy of investigating after suspected prohibited trades were placed.
Both moves came hours after Senators Adam Schiff and John Curtis introduced the Prediction Markets Are Gambling Act, bipartisan legislation that would ban prediction market operators from listing contracts on sporting events.
The announcement sent shares in DraftKings and Flutter higher on the prospect of reduced competition from event contract platforms.
What comes next
As prediction markets attract growing legislative and regulatory pressure, operators are increasingly investing in surveillance infrastructure as a core part of their public positioning. Polymarket’s recent sports integrity partnership with Palantir Technologies and TWG AI shows that compliance capability is becoming a competitive signal, not just a legal requirement.
The new rules may prove a genuine turning point for platform integrity. They may equally reflect a calculated response to mounting legislative pressure. How quickly the framework is tested in practice will determine which reading holds.
Keep reading
Do you have a story worth sharing?
Send it over to our editors!
