Whether a person should or should not trade prediction markets is driven by the information they possess and whether or not they hold an influence over an event. The test boils down to three primary questions:
- Do you have any non-public information about the event that’s being traded?
- Can you, or anyone in your household, alter the outcome of that event?
- Does a rule at your employer, agency, league, or newsroom already restrict your ability to trade event contracts?
Across the world, statutory law restricts public officials from trading financial instruments tied to their duties, while exchanges bar anyone with power to alter a market’s outcome (or settlement). Everyone else is eligible to trade on prediction markets, with access governed strictly by legal, platform, and employer rules.
Who is barred from trading prediction markets?
Statutory law and exchange rulebooks create four distinct layers of restrictions. The restrictions range from federal criminal prohibitions down to jurisdiction and age baselines.
Barred by statutory law.
Globally, statutory law restricts specific categories of public officials from trading event contracts in relation to their official duties.
Statutorily, governments forbid public officials, legislators, and judicial officers from using non-public official information to trade derivatives or event contracts. For example, US regulations and specific legislative chamber rules explicitly ban senators, officers, and staff from trading contracts tied to official business.
Internationally, statutory frameworks divide oversight between gambling law and financial retail bans. The United Kingdom classifies non-financial prediction markets under the Gambling Commission, where using inside information is prosecuted as criminal cheating, while its Financial Conduct Authority maintains an outright retail prohibition on financial binary options. Across the European Union, national regulators enforce permanent MiFID II prohibitions on marketing binary options to retail investors, restricting access to licensed institutional entities bound by standard insider-trading rules.
Enforcement of these statutory limits has produced direct legal and platform penalties. For example, a former White House teleprompter operator who traded speech transcripts on Kalshi’s ‘mention markets’ had roughly $90,000 frozen before settlement with the CFTC in August 2026. Former Representative George Santos received a lifetime platform ban from Kalshi that same month after placing trades against his own unannounced State of the Union attendance plans. Military personnel face separate statutory limits; in April 2026, federal prosecutors and the CFTC charged an Army Special Forces master sergeant for trading roughly $400,000 on contracts tied to Venezuelan political outcomes.
Barred by exchange rulebooks.
Exchange rulebooks restrict broader classes of participants than statutory law. Platform rules bar anyone who can influence an event result, regardless of whether they hold confidential information or owe a fiduciary duty. Political candidates fall directly under this restriction; in April 2026, Kalshi issued five-year suspensions and fines to three congressional candidates who placed $50 to $100 trades on their own races.
Employees of primary source agencies, the official organizations whose published data or decisions determine contract settlement, face automatic bans on markets tied to their agency's output. ForecastEx codifies these source-agency restrictions directly in Rule 509(h) of its rulebook, while Kalshi maintains a public roster of designated source agencies whose staff are prohibited from trading related contracts.
Corporate employees occupy a unique regulatory gap between internal policies and exchange rules. A March 2026 legal memorandum from Cleary Gottlieb noted that most corporate insider-trading policies restrict traditional securities rather than event contracts, yet exchange rulebooks bar these employees from trading internal company data directly.
Federal prosecutors enforce these boundaries when employees misuse confidential workplace data. In May 2026, federal prosecutors charged a Google software engineer for wire fraud and commodities fraud after he used internal search-trend tools to trade over $2.7 million on Year in Search prediction markets on Polymarket, netting $1.2 million in illicit profits.
Sports leagues apply strict restrictions across platforms to protect event integrity. An August 2025 memorandum from Major League Baseball and the MLBPA named Kalshi, Polymarket, Robinhood, and Crypto.com as prohibited trading platforms for players and staff. The NFL enforces these limits under its existing gambling policy, while the NCAA maintains an outright ban barring all student-athletes and athletic department staff from wagering on sports-adjacent event contracts.
Barred by employer policies and household rules.
Employer policies create a third layer of restrictions focused on topic coverage and immediate family access. For example, news organizations including The New York Times, ProPublica, NPR, and Time maintain explicit rules that bar journalists from trading financial markets on topics they cover.
Institutional ethics rules frequently extend these trading bans to an employee's immediate household. Major central banks, including the Federal Reserve and European Central Bank, prohibit prediction market transactions on monetary policy actions by staff, spouses, and minor children, while executive agencies enforce strict workplace rules against using non-public data for personal trades.
Barred by jurisdiction, age, and platform monitoring.
Geographic jurisdiction establishes the baseline for market access through a split between domestic oversight and international gambling laws.
In the United States, traders access prediction markets through CFTC-regulated entities, though state-level litigation and registration rules keep select markets restricted in certain states. Globally, platform access is available across over 100 countries, though major jurisdictions, including France, Singapore, and OFAC-sanctioned regions, enforce explicit blocks under local gambling regulations and sanctions frameworks.
Baseline eligibility requires meeting platform age thresholds, setting 18 as the minimum trading age alongside mandatory identity verification on regulated exchanges. Exchanges enforce these boundaries using IP geoblocking, identity verification, and on-chain analytics to detect restricted traders. Platform enforcement is immediate; accounts face swift termination and asset freezes upon detection, well before formal regulatory charges occur.
Who is able to trade prediction markets.
Anyone who holds no inside information, possesses no influence over the event, and is governed by no employer restriction is eligible to trade. Eligibility is a matter of market access rather than a statement of whether someone should trade prediction markets or not (and if it’s financially prudent to do so).
Broad market access allows a wide variety of public participants and institutional actors to trade legally, such as:
- Everyday Retail Traders (General Public): The vast majority of participants. Anyone 18+ who doesn't work for a source agency, hold non-public information, or have employer bans is completely eligible to trade real money on public events (e.g., elections, pop culture, sports, macro data).
- Independent analysts using public data: Financial regulations explicitly protect informational advantages built on public data. For example, a private meteorologist analyzing public weather models is legally eligible to trade a temperature contract. By contrast, a meteorologist employed by the official weather service providing the settlement data is strictly barred by source-agency rules.
- Commercial hedgers managing operational risk: Businesses face no legal bar when using event contracts to offset real-world revenue exposure. A citrus farm facing freeze risks can buy temperature contracts to offset potential crop damage, an ice cream shop can buy cold-weather contracts to recover lost foot traffic during unseasonable cold snaps, and a sports bar offering a free-drinks promotion tied to a local team's championship run can trade event contracts to cover the promotional payout if the team wins.
- Retail traders using paper-trading accounts: Individuals seeking to test market hypotheses without financial exposure can utilize paper-trading infrastructure.
- Arbitrageurs & Automated Market Makers (Quant Traders): High-frequency or algorithmic traders who provide liquidity across order books or profit from price mismatches between platforms using entirely public market data.
Who should not trade for practical reasons.
Just because you legally can trade doesn’t mean you always should. While the law permits most individuals to participate, real-world obstacles, tax traps, and behavioral risks make prediction markets unsuitable for several categories of traders.
Participants who fall into any of the following profiles face significant practical risks:
- Individuals exhibiting problem gambling behaviors. Major responsible-gambling organizations classify event-contract trading as functionally equivalent to gambling due to its rapid execution and outcome-driven mechanics. Account holders prone to impulsive trading, chasing losses, or overriding self-imposed limits face documented financial risks.
- Taxpayers avoiding complex or ambiguous tax accounting. National tax authorities rarely provide dedicated guidance for event contracts, and major exchanges seldom issue unified tax reporting forms. Traders face severe reporting ambiguity over whether settlements qualify as ordinary income, capital gains, or wagers subject to strict loss-deduction caps.
- Participants relying on undisputed, automated settlement. Decentralized platforms introduce resolution risk through community oracle mechanics. Polymarket has recorded hundreds of disputed contract resolutions where payout timing and final settlement depended on decentralized token-holder votes rather than primary administrative data feeds.
- Traders requiring guaranteed execution or instant liquidity. Order book depth varies widely across markets. Low-volume niche contracts frequently lack market-maker support, forcing participants to hold illiquid positions until final settlement rather than exiting early.
Finally, financial exposure to prediction markets should remain restricted strictly to discretionary funds that a participant can afford to lose.