Key highlights:
- Hollywood studios are banning employees from betting on Kalshi and Polymarket over concerns that insiders could exploit confidential information
- Several firms have introduced an anonymous reporting channel for suspected insider betting, but enforcement of the rules poses a major challenge
- The crackdown follows high-profile insider betting cases involving a MrBeast employee and an active-duty U.S. soldier accused of using classified information to place prediction market wagers
Hollywood studios and production companies are tightening restrictions on employee betting through prediction markets such as Kalshi and Polymarket. Despite the tighter restrictions, there are concerns that Hollywood studios face a steep mountain to climb regarding the enforcement of the rules.
Hollywood studios clamp down on Kalshi and Polymarket betting
According to a report by The Hollywood Reporter, companies are now rolling out guidelines prohibiting employees from betting on industry developments they may know about through their jobs. The restrictions cover casting decisions, movie release dates, studio earnings, production schedules, and award nominations.
The new rules also prohibit employees from sharing confidential information with friends or family members so they can place bets on their behalf. Per the report, some companies have launched whistleblowing strategies, urging employees to anonymously report colleagues suspected of using insider knowledge to bet on prediction marketplaces.
Penske Media Corporation (PMC), the parent company of The Hollywood Reporter, Variety, Deadline and Dick Clark Productions, has also updated its employee handbook to explicitly prohibit prediction market bets involving award nominations, casting decisions, production timelines and release dates.
The restrictions come as prediction markets expand into entertainment, allowing users to wager on a range of outcomes. Several markets have opened on popular prediction platforms, taking bets on the lead actor for a reboot of long-running shows, while others are betting on the next elimination on reality shows.
Amid the rising concerns associated with insider knowledge, betting platform BetOnline temporarily suspended its market on who would play the next James Bond after an influx of bets pushed Callum Turner ahead of longtime favorite Jack Lowden. The sudden movement raised concerns that some traders might have access to confidential casting information before an official announcement.
Source: PolyMarket
Prediction markets clamp down hard on insider trading
While Hollywood is making concerted efforts to prevent illicit gains from insider knowledge, the prediction market platforms are tightening the screws from their end. Back in June, Kalshi released a raft of sweeping measures to fight insider trading, famously requiring employer information from users in certain markets.
At the time, Kalshi noted that the requirement would only apply to markets with heightened insider or manipulation risk. Furthermore, the platform shared plans for an improved whistleblower policy while disclosing that it had opened 150 investigations into alleged insider trading cases.
Other prediction marketplaces adopted similar self-policing measures with impressive levels of success. Back in February, Kalshi confirmed that a video editor at MrBeast’s firm had made unfair profits by using insider information to bet on MrBeast’s content.
Federal prosecutors have waded into the space, charging suspects with insider trading on prediction markets. A Google engineer was charged with commodities fraud and money laundering over a string of Polymarket bets using confidential company data.
Despite the tightening screws, there are concerns that employees can still sidestep the rules and profit using insider knowledge. Unlike traditional brokerage accounts, blockchain-based platforms can allow users to trade through pseudonymous cryptocurrency wallets, making it difficult to connect particular wagers to individual employees.