Goldman Sachs has restricted employee trading on prediction markets over concerns that staff could use sensitive information to bet on financial, political or corporate outcomes, according to reports citing an internal memo. The bank told employees they may participate only in sports and entertainment prediction markets, with restrictions applying to event-based contracts that could create actual or perceived conflicts of interest. The policy reflects broader concern among large financial institutions that prediction markets are becoming close enough to tradable financial products to require the same internal controls banks already apply to stocks, bonds and derivatives.
Goldman Sachs Limits Employee Access to Sports and Entertainment Markets Only
Goldman Sachs told employees that they may participate only in sports and entertainment prediction markets, according to reports citing an internal memo. The restrictions apply to event-based contracts that could create actual or perceived conflicts of interest, particularly markets tied to finance, politics, companies, economic data or other subjects where employees may have access to material non-public information.
The bank's memo warned that violations could lead to disciplinary action and, in some cases, forfeiture of gains. The policy reflects concern that prediction markets are becoming close enough to tradable financial products to require the same kind of internal controls that banks already apply to stocks, bonds, derivatives and private information.
The compliance issue is especially acute for investment banks. Employees may encounter confidential information about mergers, earnings, financing transactions, client activity, government policy, economic releases or market-moving corporate decisions. Even if a prediction-market contract is not a security in the traditional sense, a bet based on confidential information could still raise legal, regulatory and reputational problems.
JPMorgan Chase, Morgan Stanley and Bank of America Implement Similar Restrictions
Goldman Sachs is not alone in reassessing employee access to prediction markets. Reuters reported that JPMorgan Chase, Morgan Stanley and Bank of America have similar policies restricting staff from betting on markets linked to non-public or sensitive financial information. Bank of America has reportedly clarified and expanded its rules to give employees more specific examples of prohibited activity, including company-specific and macroeconomic event contracts.
The risk extends beyond personal profit. A bank employee's activity on a public or semi-public prediction market could signal information to others, undermine client trust or create the appearance that the firm is benefiting from privileged knowledge. For highly regulated institutions, perception can matter almost as much as proven misconduct.
Kalshi Considers Employer Disclosure Requirements Amid Insider-Trading Concerns
Kalshi has reportedly considered requiring users to disclose their employers before participating in certain sensitive contracts, after advisers recommended stronger controls to reduce manipulation and misuse of privileged information. The policy shift comes as regulators, lawmakers and market operators pay closer attention to insider-trading risks in event markets.
The Wall Street Journal reported in May that U.S. senators voted to ban themselves from trading prediction markets after cases involving alleged use of sensitive government information. Other reports have highlighted suspicious wagers around political and geopolitical events, reinforcing fears that event contracts can reward people with early access to confidential outcomes.
The legal framework remains unsettled. Prediction markets sit between finance, gambling, data markets and political forecasting. Some platforms operate under Commodity Futures Trading Commission oversight, while others have historically relied on offshore or crypto-native structures. That makes employee-compliance policies more difficult because traditional insider-trading rules were built mainly around securities and commodities markets, not every possible real-world event.
FAQ
What did Goldman Sachs restrict employees from doing on prediction markets?
Goldman Sachs restricted employees from trading on prediction markets except for sports and entertainment categories. The bank told employees they may not participate in event-based contracts tied to finance, politics, companies, economic data or other subjects where they may have access to material non-public information. Violations could lead to disciplinary action and forfeiture of gains.
Why did Goldman Sachs implement this prediction-market policy?
Goldman Sachs implemented the policy over concerns that staff could use sensitive information to bet on financial, political or corporate outcomes. The bank views prediction markets as becoming close enough to tradable financial products to require the same internal controls already applied to stocks, bonds, derivatives and private information. The policy aims to prevent actual or perceived conflicts of interest and insider-trading risks.
Which other banks have similar prediction-market restrictions?
Reuters reported that JPMorgan Chase, Morgan Stanley and Bank of America have similar policies restricting staff from betting on markets linked to non-public or sensitive financial information. Bank of America has reportedly clarified and expanded its rules to give employees more specific examples of prohibited activity, including company-specific and macroeconomic event contracts.
