Goldman Sachs has tightened its internal compliance rules governing employee participation in prediction markets, restricting staff from placing bets on contracts tied to financial markets, politics, and other sensitive events that could create real or perceived conflicts of interest. The move reflects growing concern across Wall Street over the rapid rise of prediction market platforms such as Kalshi and Polymarket, which allow users to trade on the outcomes of elections, economic events, corporate actions, and geopolitical developments.
The updated policy is part of a broader industry effort to address regulatory and ethical risks associated with event-based contracts, particularly where employees of financial institutions could possess material non-public information. Several major U.S. banks have introduced or clarified similar policies in recent months.
Goldman Sachs Restricts Prediction Market Bets
Under the revised policy, Goldman Sachs employees are prohibited from trading prediction-market contracts linked to:
- Financial markets.
- Individual companies, including Goldman Sachs.
- Election outcomes.
- Macroeconomic events.
- Other politically or financially sensitive topics.
However, the restrictions do not apply to sports and entertainment-related prediction markets, which the bank considers lower-risk from a compliance perspective.
Goldman Sachs’ Updated Rules
| Category | Employee Policy |
|---|---|
| Financial market contracts | Prohibited |
| Political event contracts | Prohibited |
| Company-specific contracts | Prohibited |
| Sports prediction markets | Permitted |
| Entertainment prediction markets | Permitted |
Strict Penalties for Violations
Goldman has paired the new restrictions with tougher enforcement measures.
According to reports, employees who repeatedly violate the policy could face:
- Disciplinary action.
- Termination of employment.
- Closure of trading accounts.
- Forfeiture of profits from prohibited trades.
If an employee earns more than $200 from a prohibited prediction-market trade, Goldman may require those gains to be surrendered or donated to charity.
Possible Consequences
| Violation | Potential Outcome |
|---|---|
| Repeated prohibited trading | Termination or disciplinary action |
| Unauthorized profits | Forfeiture or charitable donation |
| Policy breach | Compliance investigation |
Why Wall Street Is Concerned
Prediction markets have expanded rapidly over the past two years, allowing participants to buy and sell contracts tied to the likelihood of future events.
Unlike traditional sports betting, these platforms increasingly offer contracts linked to:
- Central bank decisions.
- Election results.
- Corporate mergers.
- Stock market levels.
- Cryptocurrency prices.
- Geopolitical developments.
For investment banks, these products raise concerns because employees may possess confidential client information or market-sensitive data that could influence event outcomes or create the appearance of insider trading. The category has also drawn major investors, as seen when Michael Burry backed Flutter and DraftKings despite prediction market competition.
Other Banks Are Following Suit
Goldman Sachs is not alone in updating its compliance framework.
According to Reuters, several major Wall Street firms have introduced similar restrictions:
| Bank | Policy Direction |
|---|---|
| Goldman Sachs | Bans finance- and politics-related prediction markets |
| JPMorgan Chase | Extends insider trading rules to prediction markets |
| Bank of America | Restricts company, macroeconomic and financial-event contracts |
| Morgan Stanley | Includes prediction markets in employee conduct rules |
| Citigroup | Declined to comment publicly on its approach |
These changes suggest prediction markets are becoming an increasingly important area of compliance oversight for global financial institutions. The tightening mirrors stricter market policing elsewhere, such as when SEBI added 18 more forensic auditors for listed firms.
Why Prediction Markets Are Under Scrutiny
Prediction markets have grown rapidly as platforms such as Kalshi and Polymarket attract traders interested in forecasting real-world events. While supporters argue that these markets improve price discovery and aggregate information efficiently, regulators and financial firms worry they could be vulnerable to:
- Insider trading.
- Conflicts of interest.
- Market manipulation.
- Misuse of confidential information.
- Reputational risks for financial institutions.
As the popularity of these platforms continues to grow, banks are updating employee conduct policies to address risks that traditional securities-trading rules did not explicitly cover.
Looking Ahead
Goldman Sachs’ tougher stance on prediction-market betting highlights how rapidly these platforms are moving into the mainstream of financial markets. By prohibiting employees from trading contracts tied to finance and politics while allowing sports and entertainment bets, the bank aims to reduce compliance risks and protect against both actual and perceived conflicts of interest.
The policy also reflects a broader shift across Wall Street, where banks are adapting long-standing insider trading and personal investing rules to cover a new generation of event-based markets. As prediction platforms continue to expand into areas such as economics, geopolitics, and corporate events, additional financial institutions and regulators are likely to introduce clearer guidelines governing employee participation.
Frequently Asked Questions
What are prediction markets?
Prediction markets are platforms such as Kalshi and Polymarket where users buy and sell contracts tied to the outcomes of future events, including elections, economic data, corporate actions, and geopolitical developments.
Why did Goldman Sachs ban staff from prediction markets?
Goldman Sachs restricted finance- and politics-related prediction market bets because employees may hold confidential client or market-sensitive information, creating real or perceived conflicts of interest and the appearance of insider trading.
Are all prediction markets banned for Goldman employees?
No. The ban covers contracts tied to financial markets, individual companies, elections, and macroeconomic events, while sports and entertainment prediction markets remain permitted. Profits over $200 from prohibited trades may have to be surrendered or donated to charity.
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