Rep. James Comer, chairman of the House Oversight and Government Reform Committee, has opened a congressional investigation into prediction market corporations Kalshi and Polymarket over issues that merchants could possibly be utilizing confidential authorities info to revenue from bets tied to political and geopolitical occasions.
The Kentucky Republican introduced Friday that the committee had despatched letters to Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan requesting data associated to consumer verification methods, suspicious buying and selling detection strategies, and restrictions aimed toward offshore entry.
Comer mentioned the inquiry throughout an look on CNBC’s “Squawk Box,” the place he mentioned lawmakers are more and more apprehensive about authorities officers doubtlessly utilizing privileged info to put worthwhile trades.
“There’s a concern now that members of Congress, members of the president’s administration, any type of government employee, can use basic insider knowledge and make huge profits on anything government related,” Comer mentioned.
The investigation arrives as prediction markets proceed to draw consideration from regulators and lawmakers. The platforms permit customers to wager on future outcomes tied to elections, sports activities contests, climate occasions, awards reveals, and authorities selections. Billions of {dollars} have reportedly flowed by means of the markets as participation expanded globally.
Committee Seeks Records on User Monitoring
In letters despatched Friday, Comer wrote that the committee is reviewing “the adequacy of company safeguards” designed to cease customers from bypassing U.S. laws and fascinating in insider buying and selling exercise.
“Internal records held by prediction market platforms are the only means by which bad actors can be identified and to determine whether platforms are meeting their legal obligations,” Comer wrote.
The committee requested each corporations to supply paperwork explaining how they confirm the identities of home and worldwide customers, implement geographic restrictions, and monitor uncommon buying and selling patterns. Comer additionally requested particulars relating to Know Your Customer insurance policies, inside reporting procedures for suspicious trades, and knowledge linked to markets tied to army operations.
The inquiry additionally seeks info relating to whether or not customers with U.S. authorities safety clearances are taking part on the platforms.
Comer acknowledged that Congress could must take legislative motion as issues surrounding insider buying and selling proceed to develop.
“So we want to not only launch an investigation to see how widespread this has been thus far, but also to prove a case that we’ve got to pass some type of legislation,” Comer mentioned. “And I think it wouldn’t be too much to ask to say members of Congress can’t participate in the predictions market, nor can government employees or people in the president’s administration.”
The committee requested that each one related data and communications be submitted by June 5.
Trades Linked to Military and Political Events Draw Scrutiny
Federal lawmakers have intensified scrutiny of prediction markets after a number of trades linked to political and army developments raised questions concerning the doable use of nonpublic info.
One case concerned a U.S. Army soldier accused of utilizing confidential info tied to the seize of former Venezuelan chief Nicolás Maduro. Authorities alleged the soldier positioned bets on Polymarket that generated roughly $400,000 in income. Reports acknowledged that Gannon Van Dyke bought $33,000 in “yes” contracts tied to a market predicting Maduro’s elimination from workplace by Jan. 31, 2026.
A separate New York Times investigation cited by the committee recognized greater than 80 Polymarket customers whose trades confirmed suspicious traits. Some bets had been reportedly positioned shortly earlier than U.S. and Israeli army strikes in Iran.
Reports additionally indicated that 9 Polymarket accounts earned a mixed $2.4 million by means of bets linked to doable U.S. army involvement in Iran.
Comer’s letter to Coplan acknowledged that the fast enlargement of cryptocurrency-based prediction markets and the anonymity out there on some platforms could have created alternatives for misuse by folks with entry to delicate info.
Kalshi additionally drew congressional consideration after a number of political candidates reportedly wagered on their very own races. In April, the corporate suspended three congressional candidates for taking part in such trades. The committee additionally referenced California gubernatorial candidate Kyle Langford buying contracts tied to his personal marketing campaign.
Kalshi, which is headquartered in New York and controlled by the Commodity Futures Trading Commission, doesn’t allow nameless betting. Polymarket operates by means of a Panama-licensed entity and maintains a restricted U.S. product regulated by the CFTC, whereas its worldwide operations fall exterior U.S. oversight.
Companies Respond as Lawmakers Push for Rules
Representatives for each corporations defended their compliance and monitoring methods following Comer’s announcement.
Elisabeth Diana, Kalshi’s head of communications, mentioned the corporate is ready to cooperate with lawmakers. “We look forward to engaging with the Committee and its members about the systems and processes that we have spent years building,” Diana mentioned. “As a US-regulated exchange we are proud of our comprehensive protections against insider trading,” she added.
A spokesperson for Polymarket additionally emphasised the corporate’s oversight framework. “Polymarket maintains a comprehensive market integrity framework. We look forward to engaging with Chairman Comer and the committee on how our platform is a pioneer in transparency,” the spokesperson mentioned.
The congressional probe follows broader efforts in Washington to manage prediction markets. Bipartisan lawmakers have launched a number of payments concentrating on insider buying and selling issues and different betting-related exercise tied to the platforms.
Earlier this month, seven Democratic lawmakers led by Rep. Chris Pappas urged Comer to subpoena each corporations. In a May 11 letter, the group wrote, “The American public has a legitimate interest in knowing whether individuals entrusted with classified national security information have used that access for personal financial gain.”
Other actions have additionally emerged in latest months. The Senate reportedly barred members and workers from taking part in prediction markets, whereas White House staff acquired warnings in April stating that buying and selling with inside info might represent a legal offense.
Meanwhile, the Senate Commerce Committee just lately examined client safety issues tied to sports activities contracts on prediction market exchanges. Several states are additionally concerned in authorized disputes involving Kalshi, Polymarket, and the Commodity Futures Trading Commission.
