Goldman Sachs bans employees from trading on prediction markets

Major financial institutions are beginning to adjust their internal policies as prediction markets grow in popularity. Goldman Sachs now prohibits employees from trading in contracts related to sensitive topics, fearing misuse of inside information.

Ban on contracts related to elections and markets

According to sources familiar with the matter, Goldman Sachs is banning employees from trading in prediction market contracts linked to the bank itself, elections, financial markets, macroeconomic data and geopolitics. A bank spokesperson declined to comment substantively on the policy but confirmed that Goldman prohibits the use of non-public information for trading in all markets.

Goldman is not alone in this. Morgan Stanley already has relevant policies in place, and Bank of America is said to be updating its guidelines, according to insiders. The rise of prediction markets thus introduces a new category of compliance risks for companies in the financial sector, reports CNBC.

Google employee charged after profiting on Polymarket

The trigger for all these policy changes can partly be traced back to a case that unfolded in May of this year. US regulators have charged a Google employee with allegedly using inside information to profit from Polymarket contracts. The employee is said to have earned roughly $1.2 million thanks to non-public information.

That case makes clear that prediction markets are no longer a niche arena but a serious environment where insider information yields real financial gains. Google’s earlier ban on prediction market extensions from the Chrome Web Store shows that the company itself is also grappling with the position these platforms occupy. It is expected that more companies will tighten their policies on prediction markets in the coming period as the sector continues to grow and regulatory scrutiny increases.