Woofun AI reports that major Wall Street financial institutions are implementing strict prohibitions on employee participation in prediction markets, driven by escalating concerns regarding the misuse of nonpublic information for speculative gains. Goldman Sachs has reportedly instituted a ban on trades involving event contracts specifically tied to the bank’s operations, covering domains such as financial markets, macroeconomic indicators, elections, and geopolitical developments, according to CNBC.

Concurrently, unnamed sources at Morgan Stanley confirmed the existence of internal policies governing such trading activities, while a Bank of America spokesperson indicated that the institution is currently finalizing new restrictive measures for its workforce. These corporate actions reflect a broader institutional wariness that has drawn the attention of the White House and US lawmakers, who have proposed legislation aimed at curbing political prediction market trading by government officials. When approached by Cointelegraph regarding the catalysts for these preventive policies, a Goldman Sachs spokesperson declined to provide comment.

The intensification of these internal controls is directly linked to a series of high-profile insider trading incidents that have triggered rigorous scrutiny from federal authorities. In May, the US Justice Department and the Commodities Futures Trading Commission (CFTC) announced that Google software engineer Michele Spagnuolo had profited $1.2 million on Polymarket by leveraging nonpublic information accessed during his employment. This case underscored the vulnerability of digital prediction platforms to corporate espionage and data leakage. A separate and equally significant incident occurred in January, when a soldier allegedly generated more than $400,000 by betting on the removal of Venezuelan President Nicolás Maduro, an event that culminated in Maduro’s ouster and capture by US forces. These cases have galvanized legislative efforts to close regulatory loopholes; on June 18, Wisconsin Representative Bryan Steil introduced a bill designed to prevent certain public officials from "wagering on public policy issues and political outcomes," though the proposal notably excluded lawmakers serving in the White House.

Woofun AI data shows that despite the tightening of corporate and legislative nooses, platform operators are aggressively pursuing regulatory expansion to facilitate higher-leverage trading. Polymarket is currently seeking approval to offer margin trading to US users, a feature that would allow participants to bet on events with reduced upfront capital requirements. To achieve this, the platform filed an application through its affiliate, Coming Home GBA LLC, to become a futures commission merchant, as detailed in a July 3 filing with the National Futures Association (NFA). This move represents Polymarket’s latest strategic effort to solidify its US footprint and attract a broader user base.

However, the platform still requires explicit authorization from the CFTC to permit non-fully collateralized trading, a critical hurdle for mainstream adoption. Cointelegraph approached Polymarket for comment on these regulatory developments, but the focus remains on the structural shift toward leveraged exposure in the prediction market sector.

The competitive landscape is further defined by the divergent regulatory statuses of key market players. Polymarket’s primary rival, Kalshi, has already secured US regulatory approval to provide margin trading services. This advantage was cemented when Kalshi’s affiliate, Kinetic Markets LLC, received authorization from the NFA in March, allowing it to operate with greater flexibility than its competitors. This regulatory head start has contributed to significant volume disparities and market positioning, as Kalshi leverages its compliant status to capture institutional and retail interest. The contrast between Polymarket’s pending applications and Kalshi’s established permissions highlights the fragmented nature of US oversight, where timing and legal strategy play decisive roles in market dominance.

Market activity has surged to unprecedented levels, driven by major global events and increased speculative interest. Polymarket recorded a historic daily taker volume of $713 million on June 20, a milestone achieved more than a week after the World Cup commenced on June 11. This spike in activity demonstrates the platform’s ability to monetize high-profile sporting events despite ongoing regulatory uncertainties. Similarly, Kalshi posted a record monthly trading volume of nearly $9.4 billion in June, fueled by heightened engagement surrounding the 2026 FIFA World Cup. These figures illustrate the rapid scaling of prediction markets, which are increasingly becoming central venues for betting on real-world outcomes. The convergence of record-breaking volumes and intensifying compliance pressures suggests a pivotal moment for the industry, where growth must be balanced against the imperative to mitigate insider trading risks and secure formal regulatory approval.