Key Insights
- Goldman Sachs restricts prediction market trades to reduce insider trading risks for employees.
- Google case increases prediction market scrutiny across companies and regulators.
- More firms review prediction market policies as compliance concerns continue to grow.
Major Wall Street banks are tightening restrictions on employee trading in prediction markets amid concerns about insider trading spreading beyond traditional financial markets.
The policy shift follows growing regulatory attention toward prediction market platforms and questions over whether existing insider trading rules adequately address event-based contracts.
Goldman Sachs Restricts Prediction Market Trading
CNBC reported that Goldman Sachs has prohibited employees from trading prediction market contracts connected to the bank, elections, financial markets, macroeconomic indicators, and geopolitical developments.
A Goldman Sachs spokesperson declined to comment on the specific policy. However, the spokesperson said the bank already prohibits employees from using material, nonpublic information to trade across all markets.
The report said Goldman Sachs is among the first major companies to introduce restrictions for prediction market trading. Many businesses continue to assess whether traditional insider trading policies are sufficient or whether separate guidance is necessary.
Legal experts told CNBC that prediction market contracts can create additional compliance challenges as long as they cover a broad range of future events.
David Oliwenstein, partner and securities enforcement practice lead at Pillsbury, said regulated companies are increasingly seeking guidance on regulatory expectations, liability risks, and compliance requirements.
Karen Woody, a law professor at Washington and Lee University, also highlighted monitoring challenges. She told CNBC that the growing number of prediction market contracts makes it harder for companies to identify every possible opportunity for employees to misuse confidential information.
The discussion intensified after U.S. authorities brought what CNBC described as the first insider trading case involving a private company and prediction markets.
In May, the Commodity Futures Trading Commission and the Department of Justice charged Google employee Michele Spagnuolo.
Authorities alleged he used private information about Google’s Year in Search lists to trade Polymarket contracts. According to the CFTC, the trades generated approximately $1.2 million in profits.
Goldman Sachs Joins Broader Corporate Compliance Efforts
CNBC contacted 50 companies regarding prediction market policies. According to the report, only three said they already have special policies. Two additional companies said they are reviewing the issue.
Following that, JPMorgan Chase has advised employees to exercise caution when trading prediction markets. Morgan Stanley confirmed it includes related provisions within its employee code of conduct. Bank of America is also updating internal guidance for employees, according to CNBC.
The report added that Kalshi and Polymarket have introduced additional compliance tools to identify suspicious trading activity. Legal experts nevertheless told CNBC that companies should not rely only on exchange safeguards. Instead, they recommended internal policies and employee training as regulatory attention continues increasing.
Regulatory Attention Continues to Expand
Prediction markets are also attracting broader regulatory and legislative attention.
Earlier this month, Google updated Chrome Web Store rules to prohibit browser extensions facilitating real-money prediction market transactions. The policy is scheduled to take effect on Aug. 1.
Congress has also entered the debate. In June, House Administration Committee Chairman Bryan Steil said lawmakers were working to expand a proposed congressional stock trading ban to include prediction market contracts tied to elections and public policy outcomes.
The combination of corporate restrictions, regulatory investigations, and legislative proposals suggests prediction markets are moving closer to the compliance standards already applied to traditional financial markets.
