Prediction Market Crackdown
Goldman Sachs and Morgan Stanley Restrict Staff from Prediction Market Trading Amid Regulatory Scrutiny.
Key Points
Goldman Sachs' internal memo specifies that repeated violations of the new prediction-market policy could lead to termination, and the bank may require employees who engage in prohibited trades to forfeit profits exceeding $200 or donate the amount to charity.
Morgan Stanley has a policy restricting prediction-market trading as part of its code of conduct, but the exact details of the policy are not publicly disclosed.
The policy context includes broader regulatory and legal actions: several countries have banned Kalshi and Polymarket, and U.S. states have moved to sue the platforms over alleged unregulated gambling.
Industry coverage emphasizes the rapid growth of prediction-market platforms and ongoing debates about oversight and legality across jurisdictions, particularly ahead of U.S. elections.
Goldman Sachs has banned its employees from trading on prediction markets like Kalshi and Polymarket, becoming the first major Wall Street bank to do so, according to MarketScreener. The new policy covers event contracts tied to financial markets and political events, with limited exceptions for sports and entertainment bets.
Morgan Stanley has also added restrictions on prediction-market trading to its code of conduct, MarketScreener reported. The moves come as these fast-growing platforms face lawsuits and bans in several countries over concerns about unregulated gambling.
Goldman's New Rules Carry Steep Penalties for Violations
Goldman Sachs issued an internal memo laying out the new policy in detail, according to GuruFocus. Employees are blocked from trading event contracts tied to specific companies — including Goldman itself — as well as political and financial events. The bank says these trades could create conflicts of interest with its professional work.
The penalties are serious. Head Topics reported that repeat violations could lead to termination. Employees who make prohibited trades may also have to give up any profits above $200 or donate that amount to charity. The strict punishment signals how seriously Goldman views the issue.
Morgan Stanley Joins In With Its Own Restrictions
Morgan Stanley has added prediction-market trading restrictions to its employee code of conduct, MarketScreener reported. The bank has not made the exact details of its policy public. The move shows that Goldman is not alone — large banks are broadly moving to limit staff participation in these markets.
Both banks frame the rules as part of a wider effort to keep personal trading separate from professional duties. Event contracts — where users bet on outcomes like election results or interest rate decisions — sit in a gray zone. Critics say they blur the line between finance and gambling.
Prediction Markets Face Lawsuits and Bans Worldwide
The bank crackdowns come as regulators and governments around the world turn up the heat on prediction-market platforms. Several countries have outright banned Kalshi and Polymarket. Inside the U.S., some states have moved to sue the platforms, claiming they operate as unregulated gambling sites, according to Freedom 96.9.
The debate has been especially sharp around election betting. Platforms like Polymarket saw huge traffic during the 2024 U.S. presidential race. Regulators worry that letting people bet on election outcomes — especially workers at firms with inside knowledge — could distort markets or create unfair advantages.
Prediction Markets Grew Fast — Now Come the Guard Rails
Prediction markets have exploded in popularity over the past few years. Kalshi and Polymarket allow users to buy and sell contracts based on whether a future event will happen. A contract might pay out $1 if a specific candidate wins an election, or nothing if they lose. The simple format has drawn millions of users.
But that rapid growth has attracted scrutiny. Wall Street banks worry that employees with access to sensitive financial data could have an edge when betting on market-related events. Goldman's new policy is a direct response to that concern — and the industry is watching to see if more banks follow suit, according to Head Topics.
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