Goldman Sachs bans staff from prediction market bets on finance and politics, allowing only sports and entertainment wagers
Goldman Sachs has told employees they may only bet on sports and entertainment on platforms like Kalshi and Polymarket, citing compliance risks from wagers on elections, interest rates and other events.
The new policy
Goldman Sachs has told employees they may only place bets on sports and entertainment events on prediction market platforms such as Kalshi and Polymarket. The bank communicated the rule in an internal memo, according to a person familiar with the matter. Multiple breaches could lead to termination. A Goldman spokesperson declined to comment on the policy.
Compliance and insider trading risks
Heavily regulated financial institutions like Goldman have strict rules on employee transactions because of their access to material non-public information. Prediction markets that allow wagers on elections, interest rates, corporate earnings and other events create new insider trading risks. The bank's move is an attempt to close that gap before it leads to regulatory trouble. Banks also want to avoid alienating prediction market firms that could become future clients or IPO candidates.
A stricter line than JPMorgan
Goldman's approach is more restrictive than that of rival JPMorgan Chase. Earlier this year, JPMorgan merely asked employees to "carefully think" before participating in prediction markets tied to the financial sector, according to a Barrons report. The contrast reflects the balancing act banks face: they want to avoid conflicts of interest without shutting out a fast-growing industry.
Suspicious bets have drawn scrutiny
The platforms have already been jarred by instances of people profiting from advance knowledge. The organisers of the Nobel Peace Prize investigated a potential leak after a flurry of successful bets on the Venezuelan political leader who won the award. A US special forces soldier allegedly placed bets on Polymarket ahead of the operation to capture Venezuelan leader Nicolás Maduro. The Financial Times also identified unusually large and well-timed bets that generated hundreds of thousands of dollars in profits from 12 suspicious accounts in the days before the initial US attack on Iran earlier this year.
Prediction market growth
Kalshi and Polymarket have grown rapidly, with the bulk of revenue still coming from sports betting. Kalshi is in talks to raise funds at a valuation of about $40bn, the FT has reported. The platforms are branching out into financial services, with Kalshi building block-trading operations. Goldman's policy is a sign that Wall Street is taking the compliance challenges seriously as these markets expand.
