In Brief
- House Oversight Chair James Comer launched an insider trading investigation into Kalshi and Polymarket, demanding documents on user verification and trading detection.
- The probe follows suspiciously timed trades tied to U.S. military action in Venezuela and Iran that triggered insider trading alarms on prediction markets.
- The committee requested internal records on geographic restrictions, identity verification, and anomalous trading monitoring from both platforms.
The House Oversight Committee is investigating whether customers of Kalshi and Polymarket used non-public information to place trades, escalating Washington’s scrutiny of the prediction market industry. Chair James Comer, R-Ky., announced the probe Friday on CNBC’s “Squawk Box,” CNBC reports.
Comer sent letters to Polymarket CEO Shayne Coplan and Kalshi CEO Tarek Mansour requesting documents on how the platforms verify user identities, enforce geographic restrictions, and detect anomalous trading. “Internal records held by prediction market platforms are the only means by which bad actors can be identified,” Comer wrote in letters seen by CNBC.
The investigation specifically cites trades made ahead of major geopolitical events, including U.S. military operations in Venezuela and Iran, where traders appeared to have advance knowledge, the Washington Examiner reports.
Congress Targets Prediction Market Loopholes
The House Oversight Committee requested documents to understand how Kalshi and Polymarket implement identity verification for domestic and international account holders, enforce geographic restrictions, and detect suspicious trading. Comer said the platforms must demonstrate they are meeting legal obligations under existing financial regulations.
This investigation follows the April 23 indictment of a U.S. Army master sergeant who allegedly used classified information to place bets on Polymarket. The case marked the first criminal insider trading charges involving a prediction market, and signaled that the DOJ and CFTC view these platforms as falling under existing securities and commodities laws, per Bloomberg reports.
The probe adds to a growing global crackdown on prediction markets that has seen Spain, Indonesia, Brazil, and India restrict Polymarket access in recent months.
What the Investigation Means for Kalshi and Polymarket
The committee also asked about “the adequacy of company safeguards to prevent access to offshore sites to circumvent compliance with applicable U.S. federal regulations.” Kalshi operates under CFTC oversight for certain event contracts, while Polymarket’s main exchange has been closed to U.S. users since a 2022 settlement with the CFTC.
Polymarket is currently in talks with the CFTC to lift the ban on U.S. users, Bloomberg reported in April. The insider trading investigation could complicate those negotiations as lawmakers push for stricter oversight rather than expanded access.
The SEC has also delayed decisions on prediction market ETFs, signaling that U.S. regulators are proceeding cautiously across the sector.
FAQ
What is the House Oversight investigating?
The committee is investigating whether Kalshi and Polymarket customers used non-public information to place trades, and whether the platforms have adequate safeguards against insider trading.
Who is James Comer?
Rep. James Comer, R-Ky., is the chair of the House Committee on Oversight and Government Reform, which has jurisdiction over financial markets regulation.
What trades triggered the investigation?
Suspiciously timed trades ahead of U.S. military operations in Venezuela and Iran, and trades linked to election outcomes, triggered insider trading alarms on both platforms.
Could this lead to new regulation?
Yes. The investigation could result in legislation that imposes anti-insider trading rules specifically tailored to prediction markets, or expands CFTC oversight authority.
How does this affect Polymarket’s CFTC talks?
The probe could complicate Polymarket’s reported negotiations with the CFTC to lift the ban on U.S. users from its main exchange.
Comer launched the investigation on May 22, 2026, requesting document production from both platforms within 14 days.