In eighteen months, the prediction market industry has assembled the surveillance apparatus that took stock exchanges decades: named detection engines, encrypted prohibited-person lists, league partnerships, forensic academics, and employment disclosure for high-risk traders. Here is the architecture, who is building it, and the cost nobody in the sector wants to price.
Summary
- Kalshi now runs a proprietary detection engine called Poirot alongside Solidus Labs for trade surveillance, IC360 for sports integrity screening, and the Wharton Forensic Analytics Lab for statistical detection methods.
- The screening moved from post-trade investigation to preemptive blocking: athletes, coaches, referees, and league personnel are screened against lists built with IC360 and the NHL, while candidates are blocked from trading their own races.
- Polymarket built differently, pairing multi-layered surveillance across its offshore and US platforms with a March partnership involving Palantir and TWG AI for sports market monitoring.
- The vendors are consolidating into a de facto standard, with IC360 and Eventus combining insider-risk lists and real-time trade surveillance into a package explicitly marketed as the sector’s emerging benchmark.
- The unpriced cost is participation: every identity check, employment disclosure, and prohibited-person list makes the regulated venues safer and pushes marginal volume toward platforms that ask for none of it.
Financial markets build their police forces after the scandal, not before it, and the construction usually takes a generation. The New York Stock Exchange operated for over a century before anything resembling modern trade surveillance existed; the systems that now watch equity markets for spoofing and insider activity accumulated in layers across decades of enforcement actions, statutes, and technology. The American prediction market industry has compressed that build into roughly eighteen months, and it has done so in public, under a congressional investigation, while growing volumes at a pace that makes each month’s controls obsolete by the next. The result is a surveillance stack with proper names: an in-house detection engine at Kalshi called Poirot, an encrypted prohibited-persons list called ProhiBet, an AI monitoring platform called HALO, a forensic academic partnership, a league relationship, a whistleblower button on market pages, and, as of last month, a requirement that traders in high-risk markets disclose their employer.
This piece maps that architecture, identifies who is actually building it, and examines the trade it embodies, because a category whose entire value proposition is open participation has spent a year and a half constructing the machinery of exclusion.
The stack, named
Kalshi has been the most public about its systems, and the components are worth listing individually because their origins tell you what the industry thinks it is defending against.
At the center sits Poirot, the platform’s proprietary monitoring engine, which runs continuous pattern recognition across every trade looking for anomalous timing, win-rate irregularities, and coordinated activity, following a detect, investigate, enforce sequence the company describes as modeled on the surveillance operations of major financial exchanges. Around it are three external layers. Solidus Labs supplies its HALO platform, an AI-driven trade surveillance system built originally for crypto venues to detect wash trading, spoofing, and layering, which is a revealing choice: the manipulation patterns the industry expects are the ones native to thin electronic order books, not to sportsbooks. IC360, the Las Vegas integrity firm that works with every major professional league, the NCAA, state gaming regulators, and the sportsbook industry, supplies the sports-specific layer, including its ProhiBet service, an encrypted list of individuals barred from participating. And the Wharton Forensic Analytics Lab contributes statistical methods for detecting insider trading and financial fraud, an academic partnership that reads as much like reputational armor as like a technical input, though the methods are real.
The most consequential change was procedural, not technological. For most of the sector’s history, prohibitions on insider participation existed in the rulebooks and were enforced after the fact, through investigation of completed trades. In March the platform shifted to preemptive blocking: after months of assembling screening lists across collegiate and professional leagues with IC360, and in partnership with the NHL directly, known athletes, officials, and league employees are now blocked from trading in associated markets before an order reaches the book. Political screening moved the same direction, extending an existing prohibition on elected officials to cover candidates trading their own campaigns. Identity verification underpins all of it, with names, addresses, and government identification collected before trading, and a whistleblower tool now sits on market pages so participants can flag suspicious activity directly. In June, reporting indicated the platform would begin requiring traders in markets flagged as high-risk to disclose their employer.
Read that list against the product’s marketing, which is about accessibility and putting your knowledge to work, and the tension is immediate. A market that asks for your government identification, your employer, and your absence from an encrypted list of prohibited persons is not a frictionless information venue. It is an exchange, in the full institutional sense, and that is precisely the point of the build.
Polymarket’s different architecture
The other major venue arrived at similar conclusions through a different route, shaped by a structural fact: it operates two platforms with different characters, an offshore blockchain-based book and a regulated US exchange.
Its public position describes multi-layered surveillance across both, combining the transparency of on-chain settlement with third-party monitoring, and its rule updates in March clarified prohibited categories of trading across the pair. The more significant move came earlier that month, when the US entity partnered with Palantir and TWG AI for integrity monitoring in sports markets, with the stated ambition of building tools that leagues and teams could use for their own competitive-integrity purposes. The choice of Palantir is not incidental. A company whose reputation rests on large-scale pattern analysis for government and defense clients signals a particular theory of the problem: that detecting coordinated abuse across a fragmented, pseudonymous participant base is a data-integration challenge, not a rules-enforcement one.
The asymmetry between the two venues is the part worth holding onto. Kalshi’s surveillance operates on a fully identified participant base inside a single regulated perimeter, which makes screening lists workable, because you can check a name against a list only if you have the name. Polymarket’s offshore book has historically been the less transparent half of its business regarding how suspicious activity is monitored, and on-chain transparency, while real, identifies wallets and not people. The industry’s screening model, built on identity, maps cleanly onto one architecture and awkwardly onto the other, and how that gap resolves as the US operation scales is one of the genuine open questions in the sector.
The vendors are writing the standard
Beneath both platforms, a supplier layer is consolidating fast enough to set the rules by default, which is how most financial-market standards actually form.
The clearest signal came in December, when IC360 and Eventus announced a combined offering pairing Eventus’s Validus platform, a multi-asset post-trade surveillance system already used by exchanges, designated contract markets, broker-dealers, and digital asset venues, with IC360’s event-integrity and insider-risk capabilities. The framing in the announcement was explicit about ambition: helping prediction market venues build trust with participants and regulators and set the standards that will support responsible growth. Vendors rarely state the standard-setting objective that plainly, and when two suppliers combine to offer a full-lifecycle package to an entire young sector, the package tends to become the baseline that regulators later reference and competitors later match.
That dynamic has a consequence the industry has not discussed publicly. If integrity infrastructure becomes a purchasable package from a small number of specialist suppliers, then compliance quality converges, which is good for the sector’s credibility and bad for any venue hoping to compete on trustworthiness. It also creates a dependency: a handful of firms will hold the screening lists, the detection models, and the case-management systems for an industry that regulators are actively deciding whether to permit. Concentration in the surveillance layer is not obviously safer than concentration anywhere else, and it has attracted none of the scrutiny that venue concentration receives.
What forced the build
None of this happened because the platforms woke up cautious. The pressure is documented and specific.
Congressional attention arrived in force: the House Oversight Committee opened an examination of insider trading risks in prediction markets in May, and its chairman requested documents from Kalshi’s chief executive covering the platform’s identity verification processes and its capacity to detect insider trading. Enforcement cases had already made the abstract concrete, with the platform disclosing actions in multiple matters including a fined video editor connected to a major creator and actions against political candidates who traded events in which they were directly involved. Investigative journalism amplified both, and a bipartisan bill in Congress would ban sports event contracts on federally regulated exchanges outright, which gives every venue an existential reason to show that its sports markets are policed.
The regulator supplied the frame. The Commodity Futures Trading Commission’s advisory earlier this year reminded designated contract markets that they are the frontline regulators of their own venues under the core principles, that event contracts sit fully under the Commodity Exchange Act, and that sports and similar real-world contracts face a higher bar to show they are not gambling in substance. Read alongside the build, the sequence is legible: the agency told exchanges the obligation was theirs, Congress threatened the most profitable product line, and the platforms responded by constructing visible, nameable, quotable infrastructure. The surveillance stack is a compliance program and a political argument at the same time, and its audience includes committee staff as much as traders.
The trade nobody wants to price
Which brings the piece to the part the announcements do not address, because it cuts against the industry’s founding pitch.
Prediction markets derive their forecasting value from broad, diverse participation. The calibration research this publication has examined finds prices well estimated precisely because many participants with different information bet real money, and thin markets with few participants produce prices carrying much less information. Every element of the integrity build reduces participation at the margin. Identity verification excludes anyone unwilling to hand over government identification. Employment disclosure excludes anyone whose employer’s name is itself sensitive. Prohibited-person lists exclude, by design, the participants with the most direct knowledge of the events being priced, which is both obviously correct as policy and a genuine subtraction from the information the market aggregates. A market on a game that bars everyone connected to the game has removed its best-informed potential traders in exchange for integrity, and that is a real trade rather than a free lunch.
The second-order effect is the sharper one. Barriers on regulated venues do not eliminate demand; they redistribute it. Volume that will not verify identity or disclose an employer migrates toward platforms that ask for neither, which in this sector means offshore books and decentralized venues operating outside the Commission’s direct reach. The integrity build therefore makes the regulated market cleaner and the unregulated market larger, which is precisely the pattern that decades of derivatives regulation have produced elsewhere, and it means the sector’s compliance success and its liquidity migration are the same event viewed from different angles.
Neither observation argues against the build. Markets on real-world events, priced by participants who may be able to influence those events, need policing more than most, and the case for preemptive screening of athletes and candidates is close to unanswerable. The argument is for pricing the cost honestly rather than presenting surveillance purely as an upgrade. The industry is buying legitimacy with liquidity, deliberately, and the exchange rate between the two is the number that will determine what this sector looks like in five years.
The precedent: how the older markets got policed
The compression is easier to appreciate against the timeline it is compressing, and the equity market’s version is instructive precisely because it took so long.
American stock exchanges operated for roughly a century and a half before anything resembling modern surveillance existed. Insider trading was not clearly illegal in the United States until case law developed through the middle of the twentieth century, systematic exchange-level market monitoring arrived later still, and the automated pattern-detection systems that now scan for spoofing, layering, and unusual pre-announcement activity are products of the last few decades, built in layers after specific scandals produced specific rules. Each layer arrived because something went wrong first: the 1929 crash produced the securities acts, later episodes produced the enforcement infrastructure, the flash crash produced consolidated audit trails. The pattern in financial regulation is almost invariably that the policing follows the harm.
Prediction markets have inverted that sequence, and the inversion is worth crediting instead of assuming cynicism. The surveillance being built now is largely preemptive: screening lists assembled before an athlete places a trade, candidate blocking before a race resolves, detection engines running against every order, not reconstructing a scandal afterward. Some of that reflects genuine intent, and some reflects that the technology exists off the shelf in a way it did not for earlier markets, which is the real reason eighteen months can substitute for eighty years. A modern venue can buy institutional-grade post-trade surveillance from a vendor and integrate a prohibited-persons list through an API. The 1930s could not.
But the borrowed timeline carries a borrowed weakness. Equity market surveillance evolved alongside the case law, the enforcement precedents, and the definitions of what actually constitutes abuse in that market, and each system was built to catch behaviors regulators had already defined. Prediction markets are installing detection infrastructure ahead of the doctrine: nobody has authoritatively defined what insider trading means in a market on a football game, whether a coach’s spouse is an insider, whether a campaign staffer trading a rival’s race is abuse, or how foreknowledge differs from expertise when the subject is a real-world event and not a company’s earnings. The tools are institutional-grade. The rules they enforce are, in places, the platforms’ own interpretations, written fast, under pressure, and awaiting a regulator or a court to confirm or discard them. That gap between capability and doctrine is the most interesting thing about the entire build, and it will be filled the ordinary way, one contested case at a time.
What to watch
Whether the standard becomes mandatory. If the Commission’s rulemaking or a future advisory references specific surveillance capabilities, the vendor package effectively becomes a licensing requirement, and the cost of entry for new venues rises accordingly. Watch the comment filings for exactly this.
The employment-disclosure rollout. How broadly high-risk markets are defined, and what share of volume sits inside them, determines whether the requirement is a narrow safeguard or a material participation barrier. Any published data on abandonment rates would be the most informative number the sector could release.
Polymarket’s identity gap. How the offshore book’s monitoring evolves as the US entity scales is the sector’s most consequential unresolved architecture question, and the Palantir partnership is the first serious attempt at an answer.
Migration evidence. Comparative volume growth between fully identified regulated venues and less restrictive alternatives is the cleanest available measure of whether the integrity build is costing the regulated market its liquidity, and it will show up first in the sports categories where screening bites hardest.
Disclaimer: This article is for information and educational purposes only and does not constitute financial, investment, or legal advice. It describes compliance systems and regulatory proceedings based on company statements and reporting available at the time of writing, and these arrangements change frequently. Nothing here is a recommendation regarding any platform or contract. Always do your own research. Information is accurate as of July 27, 2026.
Frequently Asked Questions
What surveillance systems do prediction markets actually use?
Kalshi runs a proprietary detection engine called Poirot for continuous pattern recognition, alongside Solidus Labs’ HALO platform for AI-driven trade surveillance, IC360 for sports integrity screening including its ProhiBet prohibited-persons list, and a partnership with the Wharton Forensic Analytics Lab for statistical detection methods. Polymarket uses multi-layered surveillance across its platforms and partnered with Palantir and TWG AI for sports market monitoring.
What changed in March 2026?
Screening moved from post-trade investigation to preemptive blocking. After months of building lists with IC360 and in partnership with the NHL, athletes, officials, and league employees became blocked from trading in associated markets before orders reach the book, and political screening extended from elected officials to candidates trading their own campaigns. Both platforms also expanded prohibitions covering spoofing, wash trading, and front-running.
Why did the platforms build this now?
Regulatory and congressional pressure. The House Oversight Committee opened an examination of insider trading risk in May and requested documents on identity verification and detection capability, enforcement cases had become public, and a bipartisan bill would ban sports contracts on regulated exchanges. The CFTC separately reminded exchanges that they are the frontline regulators of their own markets under the core principles.
What is ProhiBet?
An encrypted list of individuals prohibited from participating in prediction markets or sports betting, operated by IC360 and used across regulated sports betting. It allows a venue to block a prohibited person without the venue itself holding the underlying list in readable form, which is how screening operates across the regulated gambling industry.
Are the surveillance vendors becoming a standard?
Effectively, yes. IC360 and Eventus combined their offerings in December, pairing real-time trade surveillance used by exchanges and designated contract markets with insider-risk and event-integrity capability, and described the goal as setting standards for the sector. When a small number of suppliers provide full-lifecycle integrity packages to a young industry, that package tends to become the baseline regulators reference.
Does more surveillance make prediction markets better?
It makes them more defensible and less open, and both effects are real. Screening the participants most able to influence outcomes is sound policy and removes the best-informed potential traders from those markets. Identity verification and employment disclosure improve accountability while excluding participants unwilling to provide them, which reduces the diverse participation that gives these markets their forecasting value.
Where does volume go when barriers rise?
Toward venues with fewer barriers, which in this sector means offshore and decentralized platforms outside direct US oversight. This is the standard pattern in derivatives regulation: tightening the regulated perimeter improves conditions inside it and enlarges the market outside it. The regulated venues’ compliance success and any liquidity migration are the same development seen from different sides.
What should participants take from this?
That the regulated venues now operate genuine exchange-grade surveillance, which is a meaningful protection, and that the identity, disclosure, and screening requirements attached to it are permanent features, not temporary responses. Anyone weighing a regulated venue against an offshore alternative is trading privacy and access against monitoring and recourse, and that is the actual choice on offer. This is educational analysis, not investment advice.
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