Prediction market giants clash, Kalshi and Polymarket compete fiercely

Predicting Markets Amid a Regulatory Tug-of-War.

By Yash Roy, Bloomberg

Translated by Saoirse, Foresight News

This is an advertisement that the U.S. prediction market platform Kalshi ran at bus stops in Washington in March, with the slogan “We don’t do death markets.” The ad emphasizes its compliance with federal oversight in order to take aim at competitor Polymarket’s overseas, unregulated operations and its sensitive trading contracts involving sensitive issues tied to military conflicts. Photographer: Daniel Hoyle / Bloomberg

As competition in the prediction market industry grows increasingly intense—and as this emerging space is coming under close regulatory scrutiny from Washington—Kalshi and Polymarket are trading major accusations at each other, launching a fierce back-and-forth.

The two platforms have long been at odds, but recently the conflict has escalated completely—Kalshi has launched a highly targeted advertising push, and its employees have also posted publicly to criticize Polymarket, with the rhetoric between the two sides rapidly growing more explosive.

On Monday, Benjamin Freeman, who oversees Kalshi’s politics and elections markets business, wrote on social media: “Polymarket’s irresponsible, dangerous, and potentially unlawful conduct is threatening the ability of legitimate U.S. prediction markets to survive.”

These accusations quickly sparked an intense public fight between the two companies.

In a statement, Polymarket responded: “We welcome competition, but we believe discussions should be based on facts. Misinuding the public only harms the interests of the entire industry and its participants.”

Kalshi spokesperson Elisabeth Diana then fired back directly: “That comment coming from a company whose vast majority of trading volume is conducted overseas without regulation—where even platform rules and the existence of ‘death markets’ are allowed—is downright laughable.”

(Note: Death Markets (“death markets”) is an umbrella term in the prediction market industry for trading contracts directly or indirectly betting on life-related events such as deaths of personnel, military conflicts, assassinations, and the like. It is also known as the ‘assassination market’.)

As this internal dispute erupts, it is precisely a critical period in which Polymarket and Kalshi are vying for the lead position in the rapidly growing prediction market industry. The industry offers Americans a new way to bet on all kinds of events, including sports events and election outcomes. According to data compiled by users on Dune Analytics, the two start-ups have recently set new highs in trading volume for the week, and their combined notional trading volume is approaching $6 billion in recent times.

Prediction market trading volume reaches the billions

Polymarket and Kalshi’s weekly notional trading volume. Note: Data is for the week of March 9; source: @datadashboards on Dune Analytics

At the heart of the two sides’ dispute is a fundamental difference in how the trading platforms are set up and how they operate. Kalshi’s headquarters are in the United States and it is regulated by the U.S. Commodity Futures Trading Commission (CFTC); meanwhile, Polymarket’s primary trading platform is based overseas.

Polymarket, leveraging the advantage of its offshore operations, has launched contracts related to military conflicts, including war-related issues involving Iran. Kalshi directly attacks that such products are both unethical and unlawful.

One of Kalshi’s ads is blunt: “We don’t do death markets.”

Since earlier this week, this marketing campaign by Kalshi—shaped as a “platform rules list”—has begun appearing on bus stops and subway stations across Washington.

One of the entries reads: “Rule One: We ban insider trading, because Kalshi is a federally regulated U.S. exchange.” In the view of industry observers, the implied message is obvious: Polymarket’s main platform is not governed by U.S. regulatory agencies.

A “BETS OFF Act” sign; Congressman Greg Casar and Senator Chris Murphy speak at a news conference on the “Ban on Trading of Sensitive Operations and Federal Functions Act (BETS OFF).” Photographer: Stephanie Reynolds / Bloomberg

Earlier, there were allegations that someone used insider information to improperly bet on U.S. military actions in Iran and Venezuela, and Congress has shifted its focus to the issue of insider trading in prediction markets. In response, Kalshi has taken a much harder line: it imposes penalties on users it deems to be in violation, such as fines and suspending trading. Polymarket has been relatively permissive; however, as regulatory attention increases, the platform has also recently published its own insider trading rules.

Kalshi spokesperson Diana said: “We want to lay out these major differences clearly. Right now, a lot of people in the market lump Kalshi and Polymarket together—and mix up the different paths we each take on regulatory compliance.”

In addition to its overseas main platform, Polymarket also has a platform that is regulated in the United States, which is still in the testing phase. In its statement, the company said both of its platforms apply “the same rigorous market integrity standards, including bans on insider trading and market manipulation, proactive monitoring of trades, and ongoing engagement and cooperation with regulators and law enforcement.”

A trade on the Polymarket website about whether the Houthis will attack Israeli territory. Photographer: Gaby Jones / Bloomberg

Just a few months ago, Kalshi co-founder Luana Lopes Lara had tried to ease tensions between the two rivals. In a social media post last October, she said she hoped the industry could move past “destructive infighting” and work together to grow.

Now, it appears that vision has largely fallen apart.

Especially after Kalshi’s adviser—and former CFTC commissioner—Brian Quintenz joined the fray, the conflict has become harder to reconcile. In response to reports that prosecutors are investigating insider trading, Brian Quintenz this week publicly suggested on social media that the investigation should focus on Polymarket. When contacted by Bloomberg News, he refused to comment further.