Whether a person should or should not trade prediction markets is driven by the information they possess and whether or not they hold an influence over an event. The test boils down to three primary questions:
- Do you have any non-public information about the event that’s being traded?
- Can you, or anyone in your household, alter the outcome of that event?
- Does a rule at your employer, agency, league, or newsroom already restrict your ability to trade event contracts?
Across the world, statutory law restricts public officials from trading financial instruments tied to their duties, while exchanges bar anyone with power to alter a market’s outcome (or settlement). Everyone else is eligible to trade on prediction markets, with access governed strictly by legal, platform, and employer rules.
Who is barred from trading prediction markets?
Statutory law and exchange rulebooks create four distinct layers of restrictions. The restrictions range from federal criminal prohibitions down to jurisdiction and age baselines.
Barred by statutory law.
Globally, statutory law restricts specific categories of public officials from trading event contracts in relation to their official duties.
Statutorily, governments forbid public officials, legislators, and judicial officers from using non-public official information to trade derivatives or event contracts. For example, US regulations and specific legislative chamber rules explicitly ban senators, officers, and staff from trading contracts tied to official business.1Congressional Research Service, "Prohibiting Senators from Prediction Market Participation," everycrsreport.com, June 2026
Internationally, statutory frameworks divide oversight between gambling law and financial retail bans. The United Kingdom classifies non-financial prediction markets under the Gambling Commission, where using inside information is prosecuted as criminal cheating, while its Financial Conduct Authority maintains an outright retail prohibition on financial binary options.2Gambling Commission, "Prediction markets: here's what you need to know," gamblingcommission.gov.uk, February 20263Ashurst Perkins Coie, "Prediction markets in the UK: gambling and insider information," ashurstperkinscoie.com, April 20264Financial Conduct Authority, "FCA confirms permanent ban on the sale of binary options to retail consumers," fca.org.uk, March 2019 Across the European Union, national regulators enforce permanent MiFID II prohibitions on marketing binary options to retail investors, restricting access to licensed institutional entities bound by standard insider-trading rules.5European Securities and Markets Authority, "Public Statement on the application of the national product intervention measures on binary options to event contracts," esma.europa.eu, July 2026
Enforcement of these statutory limits has produced direct legal and platform penalties. For example, a former White House teleprompter operator who traded speech transcripts on Kalshi’s ‘mention markets’ had roughly $90,000 frozen before settlement with the CFTC in August 2026.6CBS News, "Ex-White House teleprompter operator ordered to pay $172,000 for insider bets on Kalshi," cbsnews.com, August 20267CFTC, "CFTC Orders Gabriel Perez to Pay $172,000 for Insider Trading of Mention Market Event Contracts" (Release 9289-26), cftc.gov, August 2026 Former Representative George Santos received a lifetime platform ban from Kalshi that same month after placing trades against his own unannounced State of the Union attendance plans.8Georgia Public Broadcasting, "Kalshi bans former congressman George Santos for life after State of the Union trades," gpb.org, August 2026
Military personnel face separate statutory limits; in April 2026, federal prosecutors and the CFTC charged an Army Special Forces master sergeant for making roughly $400,000 in profit on contracts tied to Venezuelan political outcomes.9U.S. Department of Justice, "U.S. Soldier Charged With Using Classified Information To Profit From Prediction Market Bets," justice.gov, April 202610CFTC, "CFTC Charges U.S. Service Member with Insider Trading in Nicolás Maduro-Related Event Contracts" (Release 9217-26), cftc.gov, April 2026
Barred by exchange rulebooks.
Exchange rulebooks restrict broader classes of participants than statutory law. Platform rules bar anyone who can influence an event result, regardless of whether they hold confidential information or owe a fiduciary duty.11KalshiEX LLC, "KalshiEX LLC Rulebook" (version 1.15), cdn.robinhood.com, January 2025 Political candidates fall directly under this restriction; in April 2026, Kalshi issued five-year suspensions and fines to three congressional candidates who placed $50 to $100 trades on their own races.12PBS News, "Kalshi fines and suspends 3 congressional candidates for betting on their own elections," pbs.org, April 2026
Employees of primary source agencies, the official organizations whose published data or decisions determine contract settlement, face automatic bans on markets tied to their agency's output. ForecastEx codifies these source-agency restrictions directly in Rule 509(h) of its rulebook, while Kalshi maintains a public roster of designated source agencies whose staff are prohibited from trading related contracts.13ForecastEx LLC, "ForecastEx LLC Rulebook" (version dated September 1, 2026), forecastex.com, September 202614Kalshi, "Kalshi Trading Prohibitions" (source agencies under Rule 5.13(s)), kalshi-public-docs.s3.amazonaws.com, September 2026
Corporate employees occupy a unique regulatory gap between internal policies and exchange rules. A March 2026 legal memorandum from Cleary Gottlieb noted that most corporate insider-trading policies restrict traditional securities rather than event contracts, yet exchange rulebooks bar these employees from trading internal company data directly.15Cleary Gottlieb, "Betting on Company Information: Prediction Market Considerations for Public Companies," clearygottlieb.com, March 2026
Federal prosecutors enforce these boundaries when employees misuse confidential workplace data. In May 2026, federal prosecutors charged a Google software engineer for wire fraud and commodities fraud after he used internal search-trend tools to trade over $2.7 million on Year in Search prediction markets on Polymarket, netting $1.2 million in illicit profits.16Al Jazeera, "Google employee charged with insider trading over Polymarket bets," aljazeera.com, May 202617CFTC, "CFTC Charges Google Employee with Insider Trading in Search Result-Related Event Contracts" (Release 9237-26), cftc.gov, May 2026
Sports leagues apply strict restrictions across platforms to protect event integrity. An August 2025 memorandum from Major League Baseball and the MLBPA named Kalshi, Polymarket, Robinhood, and Crypto.com as prohibited trading platforms for players and staff.18Front Office Sports, "MLB Sent Memo Warning Players About Prediction Markets," frontofficesports.com, December 2025 The NFL enforces these limits under its existing gambling policy, while the NCAA maintains an outright ban barring all student-athletes and athletic department staff from wagering on sports-adjacent event contracts.19ABC News, "NFL calls on prediction market apps to ban 'objectionable bets'," abcnews.com, September 202620NCAA, "DI schools rescind betting rules change; ban on pro sports betting remains in place," ncaa.org, November 2025
Barred by employer policies and household rules.
Employer policies create a third layer of restrictions focused on topic coverage and immediate family access. For example, news organizations including The New York Times, ProPublica, NPR, and Time maintain explicit rules that bar journalists from trading financial markets on topics they cover.21The New York Times, "Ethical Journalism: A Handbook of Values and Practices for the News and Opinion Departments," nytimes.com22Poynter, "The rise of prediction markets is creating new ethical headaches for journalists," poynter.org, June 2026
Institutional ethics rules frequently extend these trading bans to an employee's immediate household. Major central banks, including the Federal Reserve and European Central Bank, prohibit prediction market transactions on monetary policy actions by staff, spouses, and minor children, while executive agencies enforce strict workplace rules against using non-public data for personal trades.23Federal Open Market Committee, "FOMC Policy on Investment and Trading for Committee Participants and Federal Reserve System Staff," federalreserve.gov, January 202624Legal Information Institute, "5 CFR § 2635.703: Use of nonpublic information," law.cornell.edu
Barred by jurisdiction, age, and platform monitoring.
Geographic jurisdiction establishes the baseline for market access through a split between domestic oversight and international gambling laws.
In the United States, traders access prediction markets through CFTC-regulated entities, though state-level litigation and registration rules keep select markets restricted in certain states.25CFTC, "Understanding Prediction Markets and Event Contracts," cftc.gov26DLA Piper, "Legal status at odds: Tracking developments in prediction markets and sports betting," dlapiper.com, September 2026 Globally, platform access is available across over 100 countries, though major jurisdictions, including France, Singapore, and OFAC-sanctioned regions, enforce explicit blocks under local gambling regulations and sanctions frameworks.27Polymarket Documentation, "Geographic Restrictions," docs.polymarket.com
Baseline eligibility requires meeting platform age thresholds, setting 18 as the minimum trading age alongside mandatory identity verification on regulated exchanges. Exchanges enforce these boundaries using IP geoblocking, identity verification, and on-chain analytics to detect restricted traders. Platform enforcement is immediate; accounts face swift termination and asset freezes upon detection, well before formal regulatory charges occur.
Who is able to trade prediction markets.
Anyone who holds no inside information, possesses no influence over the event, and is governed by no employer restriction is eligible to trade. Eligibility is a matter of market access rather than a statement of whether someone should trade prediction markets or not (and if it’s financially prudent to do so).
Broad market access allows a wide variety of public participants and institutional actors to trade legally, such as:
- Everyday retail traders (general public): The vast majority of participants. Anyone 18+ who doesn't work for a source agency, hold non-public information, or have employer bans is completely eligible to trade real money on public events (e.g., elections, pop culture, sports, macro data).
- Independent analysts using public data: Financial regulations explicitly protect informational advantages built on public data. For example, a private meteorologist analyzing public weather models is legally eligible to trade a temperature contract. By contrast, a meteorologist employed by the official weather service providing the settlement data is strictly barred by source-agency rules.
- Commercial hedgers managing operational risk: Businesses face no legal bar when using event contracts to offset real-world revenue exposure. A citrus farm facing freeze risks can buy temperature contracts to offset potential crop damage, an ice cream shop can buy cold-weather contracts to recover lost foot traffic during unseasonable cold snaps, and a sports bar offering a free-drinks promotion tied to a local team's championship run can trade event contracts to cover the promotional payout if the team wins.28iGaming Business, "Hedging risk via prediction market contracts," igamingbusiness.com, August 2026
- Retail traders using paper-trading accounts: Individuals seeking to test market hypotheses without financial exposure can utilize paper-trading infrastructure.
- Arbitrageurs and automated market makers (quant traders): High-frequency or algorithmic traders who provide liquidity across order books or profit from price mismatches between platforms using entirely public market data.
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Who should not trade for practical reasons.
Just because you legally can trade doesn’t mean you always should. While the law permits most individuals to participate, real-world obstacles, tax traps, and behavioral risks make prediction markets unsuitable for several categories of traders.
Participants who fall into any of the following profiles face significant practical risks:
- Individuals exhibiting problem gambling behaviors. Major responsible-gambling organizations classify event-contract trading as functionally equivalent to gambling due to its rapid execution and outcome-driven mechanics. Account holders prone to impulsive trading, chasing losses, or overriding self-imposed limits face documented financial risks.
- Taxpayers avoiding complex or ambiguous tax accounting. National tax authorities rarely provide dedicated guidance for event contracts, and major exchanges seldom issue unified tax reporting forms. Traders face severe reporting ambiguity over whether settlements qualify as ordinary income, capital gains, or wagers subject to strict loss-deduction caps.
- Participants relying on undisputed, automated settlement. Decentralized platforms introduce resolution risk through community oracle mechanics. Polymarket recorded more than 1,150 disputed contract resolutions in the first five months of 2026 alone, where payout timing and final settlement depended on decentralized token-holder votes rather than primary administrative data feeds.
- Traders requiring guaranteed execution or instant liquidity. Order book depth varies widely across markets. Low-volume niche contracts frequently lack market-maker support, forcing participants to hold illiquid positions until final settlement rather than exiting early.
Finally, financial exposure to prediction markets should remain restricted strictly to discretionary funds that a participant can afford to lose.