Surge in suspicious trades forces prediction platforms to build sportsbook-style surveillance

According to Reuters, Kalshi has flagged more than 400 suspicious trades since the start of 2026, already more than double the number it investigated in all of last year, while Polymarket has also seen a significant increase in trades flagged as suspicious. That makes this less a story about isolated bad actors and more a story about what prediction markets start to look like once they become big enough to attract serious money and serious scrutiny.

The commercial significance is clear. Prediction markets have often sold themselves on speed, access and flexibility, especially when compared with traditional sportsbooks or more tightly controlled financial venues. But as volumes rise, that light-touch appeal becomes harder to maintain. Reuters said Kalshi’s annualised trading volumes have risen to $178 billion, while Polymarket’s monthly notional volumes across its offshore and U.S. platforms reached roughly $10.3 billion in April, up sharply from a year earlier. At that scale, surveillance is no longer back-office housekeeping. It becomes part of the product itself.

For operators, that is the real angle. A platform can no longer rely on novelty and liquidity alone if users and regulators think the sharpest traders are consistently acting on privileged information. The more event markets resemble sportsbooks in user behaviour, the more they are likely to need sportsbook-style integrity controls, from identity checks and account monitoring to rules around who is allowed to trade on politically or commercially sensitive contracts. Platforms have reportedly already started tightening rules, including moves to restrict certain insider-style activity and to remove some controversial contracts after scrutiny.

This matters for cost as much as compliance. Better surveillance means more staff, stronger monitoring systems, more legal review and more intervention in markets that might previously have been left to run. That raises the operating burden for a category that has often looked structurally leaner than licensed gambling. It may also favour larger operators with deeper funding, especially those that can absorb the expense of building proper market integrity systems without slowing product development too sharply.

There is a competitive implication as well. Crypto sportsbooks and casinos have already had to live with tighter controls as they scaled. Prediction markets are now moving into the same phase. If the distinction between event trading and betting becomes narrower in practical terms, then trust and governance may start to matter as much as market menu and user growth. In other words, the category is maturing, and maturity is expensive.

The broader takeaway is that prediction markets are becoming too large to run on informal assumptions. The more money flows through them, the less tolerance there will be for a system that looks fast but fragile. That does not weaken the category. It may ultimately strengthen it. But it does mean the next stage of growth will be defined less by hype and more by whether operators can build surveillance and enforcement strong enough to convince users they are not always trading one step behind someone else.