Goldman Sachs has instructed employees to restrict their participation in prediction markets to sports and entertainment wagers. The Wall Street firm issued a memo detailing compliance risks associated with betting on events like elections or interest rates, with repeated violations potentially leading to termination.

This move addresses regulatory challenges posed by rapidly growing prediction platforms like Kalshi and Polymarket. These nascent markets allow users to bet on a wide range of outcomes, from political events to market movements, raising concerns about insider trading given the proximity of financial institutions to material non-public information.

Recent incidents, including bets placed before the Nobel Peace Prize announcement and an operation to capture Nicolás Maduro, have highlighted the potential for profit based on advance knowledge. Kalshi is reportedly in talks to raise funds at a $40 billion valuation, underscoring the increasing financial stakes in these platforms.