Wall Street has spent decades drawing bright lines around what counts as a bet versus an investment. Compliance manuals grew thick because the cost of getting that line wrong is jail time and seven-figure fines.
Most of those manuals never imagined a 22-year-old in a Brooklyn coffee shop risking $10 on whether the Federal Reserve cuts interest rates in June. Or the same trader staking $50 on the Eagles covering a Sunday spread.
That world has shifted fast. Kalshi and Polymarket, the two largest prediction-market platforms, now clear billions of dollars in weekly trading volume. Institutional money has flooded in. Robinhood (HOOD) lets retail customers buy Kalshi event contracts directly, and Intercontinental Exchange (ICE), parent of the New York Stock Exchange, plowed roughly $2 billion into Polymarket last year.
My read on the rise of these markets has always come back to one quiet question. If a bank trader, a corporate insider, or a campaign aide already knows what is about to happen, what stops them from typing it into Kalshi and walking away with a quick five-figure profit?
Now JPMorgan Chase (JPM) is finally giving its 320,000 employees an answer.
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What JPMorgan’s staff guidance actually says
The guidance, viewed by Barron’s, was circulated to staff this spring and stops short of an outright ban. The memo tells JPMorgan bankers they “must be cautious” when using prediction markets and warns clearly against insider trading, according to Barron’s. Employees are not required to pre-clear their trades with compliance, which is a notable choice for a bank that pre-clears almost everything else.
The trickier instruction sits a few paragraphs deeper. Staff are told to pull back from any prediction market that involves JPMorgan itself, on the grounds that other observers might read such a bet as a misuse of nonpublic information. The memo also names sensitive territory like stock prices, earnings, regulatory filings, and leadership changes within the financial sector.
Related: JPMorgan executive says one thing is keeping AI in check
That last bullet is what caught my eye. Markets on which Wall Street executives will get pushed out next, or whether a major bank will beat its earnings number, are exactly the contracts Kalshi and Polymarket have started rolling out. Some have even listed bets on Jamie Dimon‘s eventual successor.
Dimon himself has been blunt about how he sees these platforms. “I think for the most part, it’s more like gambling,” the CEO told CBS News in late March. He added that some traders are doing real research, taking the other side of a bet because they think they know better.
I’d argue Dimon’s distinction between gambling and investing is the whole tension at the center of this story. A retail trader who reads earnings transcripts cover-to-cover and bets on Goldman Sachs (GS) missing its quarter is doing research. A Goldman analyst who saw the same numbers a week early is doing something else. The Kalshi terminal does not know the difference.
More Wall Street
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How prediction markets got too big for Wall Street to ignore
Two years ago, almost no one outside the crypto crowd knew what Polymarket was. Kalshi was a small, slow, regulated cousin trading less than 5% of sector activity. Today the two platforms together account for more than 90% of global prediction-market volume and have become a recurring topic in financial regulation hearings.
The growth curve looks vertical. Sector trading volume jumped from roughly $16 billion in 2024 to nearly $64 billion in 2025, reported American Banker. Bernstein analysts project total prediction-market volumes will hit $240 billion in 2026, a 370% jump from last year.
A few of the milestones tell the story better than any forecast:
Prediction markets by the numbers
- Kalshi just raised $1 billion at a $22 billion valuation, with weekly trading volume now at $3 billion, up from $100 million a year ago, reported Decrypt.
- Polymarket pulled in a $2 billion investment from Intercontinental Exchange last year and is now fundraising at a $15 billion valuation, according to The Block.
- Kalshi processed more than $1 billion in trading volume on Super Bowl Sunday alone in February, up roughly 2,700% from the prior year, reported Fortune.
The harder part is policing all of it. The Department of Justice charged a U.S. Army soldier this spring with five felonies for allegedly using classified information about the operation to capture Venezuelan President Nicolas Maduro to wager $33,000 on Polymarket, reported Fortune. The trade later cashed out for roughly $400,000.
There is academic firepower behind the concern, too. Columbia Law professor Joshua Mitts published research this year analyzing two years of Polymarket data and flagging trades that statistically resembled insider activity, according to American Banker. Polymarket has historically tagged seemingly informed bets on its social media feeds rather than blocking them outright, and only recently rolled out clearer rules against trades that use stolen confidential information.
Kalshi has had its own rough quarters. The platform suspended and fined three federal candidates this year for what it called “political insider trading” after an internal probe found the candidates bet on their own campaigns, reported NPR.
Why retail traders should pay attention now
JPMorgan’s memo matters beyond its 320,000 employees because Wall Street firms tend to move in herds on this kind of compliance question. When Barron’s asked all 30 Dow Jones Industrial Average constituents earlier this year whether they had employee rules on prediction-market trading, only one company even responded, and that one declined to comment.
JPMorgan is the first major bank to commit its position to writing, but it almost certainly will not be the last. Other Wall Street rivals face the same compliance gray zone, and Barron’s reporting suggests several Dow Jones constituents are watching closely before saying anything in public.
That silence is starting to break. Federal lawmakers have already introduced the Public Integrity in Financial Prediction Markets Act of 2026 to ban politicians, appointees, and federal staff from betting on government decisions, reported Coinpaper. CFTC enforcement chief David Miller has warned traders publicly that insider trading on these platforms will not be tolerated.
For retail readers, the takeaway is simple but uncomfortable. The same edge that lets a senator or a bank trader make easy money on Kalshi works the other way too. If you keep buying contracts where someone on the opposite side already knows the answer, you are the exit liquidity.
Prediction markets are not going away. Bernstein analysts see the sector hitting $1 trillion by 2030. JPMorgan’s quiet new memo is an early signal that the rules of the road are still being written, and the reader who watches who moves next will avoid being on the wrong side of them.
Related: JP Morgan CEO has blunt inflation message
