Predictive Markets: Kalshi Accuses Polymarket of Regulatory Laxity

Kalshi has openly put Polymarket on notice to strengthen its identity checks, under threat of having to close its offshore platform. The dispute between the two leaders of predictive markets worsened in mid-May, as the U.S. Congress launched its own investigation into the two leaders. Two opposing visions of compliance now confront each other in a sector under increasing regulatory scrutiny.

Polymarket Denies, Kalshi Counterattacks

Recent reports mentioned a Polymarket project to introduce identity verifications to block VPN usage, with benefits such as direct colocation for verified users. Josh Stevens, Vice President of Engineering, firmly denied this information.

“No KYC procedure is being added to any part of the existing polymarket.com site at this launch. Once out of its beta phase, this product will also not require KYC“, he specified on X.

However, Robert J. DeNault, Compliance Officer at Kalshi, has not backed down. He points to concrete flaws: Iranian and Russian users active on the platform, and even a delivery of goods in Moscow to recruit new users. His conclusion is straightforward.

Enough is enough… If Polymarket truly wants to end this, it should bring all its operations into compliance (starting with the KYC procedure) or close its offshore platform. What currently exists is neither safe nor fair to offer prediction markets.

Congress Opens a Formal Investigation

On May 22, Representative James Comer, chairman of the House Oversight and Government Reform Committee, announced a formal investigation targeting both platforms. Letters were sent requesting data on current identification processes and validated anti-insider trading measures.

On this last point, the two rivals had anticipated. Before this year’s Super Bowl, Kalshi modernized Poirot, its active monitoring system, directly involving its senior executives in handling sensitive cases. Polymarket, for its part, deployed an updated regulation to better identify and curb insider practices.

Regulatory pressure is therefore increasing on a sector which, after the enthusiasm of the last U.S. elections, is still seeking to establish solid legal foundations.

In sum, this showdown illustrates a structural tension: Polymarket bets on the flexibility of its dual model to attract as many global users as possible, while Kalshi plays the total compliance card as a competitive advantage. The Congressional investigation, combined with pressure from peers like Kalshi, is likely to accelerate decisions. KYC, long postponed, is inevitably drawing closer.