Goldman Sachs has introduced new restrictions on employee participation in prediction markets, limiting betting activity to sports and entertainment categories as the Wall Street bank seeks to address compliance risks associated with wagers tied to financial markets, elections, and other sensitive events.
According to a person familiar with the matter, the bank informed employees of the new policy through an internal memorandum, warning that repeated violations could result in termination of employment. Goldman Sachs declined to comment on the policy. Bloomberg previously reported the existence of the internal memo.
The move reflects the compliance obligations faced by heavily regulated financial institutions, where employees are subject to strict rules governing personal transactions because of the potential access to material non-public information. Such safeguards are designed to prevent conflicts of interest and the misuse of information that could influence financial markets.
The emergence of prediction market platforms such as Kalshi and Polymarket has created new challenges for those compliance frameworks. The platforms allow users to place wagers on a broad range of outcomes, including political events, economic indicators, and financial market movements, expanding well beyond traditional sports betting.
Prediction markets have experienced rapid growth as consumers increasingly use the platforms to speculate on the outcome of world events and financial benchmarks, including the future level of the S&P 500. The expansion of the sector has attracted investor interest, with the Financial Times previously reporting that Kalshi is in discussions to raise funding at a valuation of approximately $40 billion.
The growing popularity of prediction markets has also drawn scrutiny over the possibility that participants could profit from advance knowledge of significant events. Questions surrounding insider information have become more prominent as the platforms expand into markets where the outcomes may be influenced by individuals with privileged access to confidential information.
Several incidents have highlighted those concerns. Organizers of the Nobel Peace Prize previously investigated a potential information leak after a series of successful bets were placed on the Venezuelan political figure who ultimately received the award. The investigation followed unusual betting activity before the official announcement.
In another case, a member of the United States Special Forces who allegedly possessed advance knowledge of an operation targeting Venezuelan leader Nicolás Maduro was reported to have placed wagers related to the event on Polymarket. The incident added to broader concerns about the possibility of individuals using privileged information to profit through prediction markets.
The Financial Times has also previously identified unusually large and well-timed bets placed by 12 accounts in the days preceding the initial United States military attack on Iran earlier this year. According to the publication, those trades generated profits worth hundreds of thousands of dollars, raising further questions about whether sensitive information may have been used before the events became public.
While sports betting continues to account for the majority of revenue generated by prediction market operators, companies in the sector are increasingly seeking to expand into financial services. Kalshi has been developing block-trading operations as part of those efforts, reflecting broader ambitions to establish a larger presence in markets linked to finance and economic events.
Goldman Sachs’ new restrictions underscore the regulatory and compliance challenges posed by the rapid growth of prediction markets as financial institutions seek to prevent employees from participating in transactions that could create conflicts of interest or raise concerns over access to confidential information.
