TL;DR:
House Oversight and Government Reform Committee Chairman James Comer launched a congressional investigation into the use of insider trading on Kalshi and Polymarket, the two largest prediction market platforms in the world. Comer sent letters last Friday to the chief executive officers of both companies requesting documents detailing how they verify identities, enforce geographic restrictions, and detect anomalous trading activity.
The Republican lawmaker announced the investigation on CNBC‘s “Squawk Box”, citing operations linked to elections and U.S. military actions in Venezuela and Iran. His goal is to determine the scope of insider trading on these platforms and build a legislative foundation to ban members of Congress, administration officials, and government employees from trading on prediction markets. The deadline for Tarek Mansour, CEO of Kalshi, and Shayne Coplan, CEO of Polymarket, to submit the required documents expires on June 5.
The investigation draws on several specific cases. In April, a U.S. soldier was arrested for allegedly using privileged information about the removal of former Venezuelan president Nicolás Maduro to earn nearly $400,000 in bets on Polymarket. A New York Times investigation also identified more than 80 users on that platform who placed suspicious trades, including bets made hours before the U.S. and Israel carried out strikes against Iran.
Both companies anticipated the scenario and tightened their controls. Kalshi suspended three congressional candidates in April who had bet on their own electoral races, in violation of the platform’s internal policies. Polymarket, for its part, hired Chainalysis, a firm specializing in blockchain analytics, to detect market manipulation and insider trading, as part of its approval process before the Commodity Futures Trading Commission (CFTC).
Comer’s initiative responds directly to pressure from seven Democratic lawmakers led by Representative Chris Pappas of New Hampshire, who on May 11 called on the Oversight Committee to issue subpoenas against both platforms.
Several bipartisan bills are already circulating in Congress aimed at restricting access to these markets for those who handle nonpublic government information. Kalshi operates under CFTC regulation in New York and does not permit anonymous trading, while Polymarket is licensed in Panama and runs its main platform outside the U.S. regulatory framework.
