House Probe Targets Kalshi, Polymarket Over Insider Trading

House Oversight Committee Chair James Comer opened a formal inquiry into prediction-market firms Kalshi and Polymarket, sending letters Friday to each company’s chief executive requesting internal records tied to suspected insider trading, know-your-customer policies and wagers connected to Iran and Venezuela.

Comer’s letters ask for internal communications, documentation of KYC standards, procedures and tools used to detect suspicious trades, internal analyses of reputational impact from insider-trading allegations, and records of deliberations about offering contracts tied to armed conflict.

The inquiry follows recent incidents that raised questions about trading on prediction markets. A U.S. Army master sergeant was arrested last week on charges that he used classified information to place winning bets on one platform; he pleaded not guilty in federal court, was released on $250,000 bond, and was ordered to surrender his passport and limit travel. Separately, Kalshi imposed fines on several U.S. politicians for placing bets on outcomes in their own elections.

Comer wrote that “this growing pattern of insider trading activity on prediction market platforms indicates that Congressional action may be necessary,” and said the committee would examine whether platforms are equipped to stop trading that relies on nonpublic government or corporate information.

Dan Boyle, a partner at Boies Schiller Flexner and a former federal prosecutor focused on gambling-related fraud, questioned the platforms’ ability to detect bad actors, asking, “If they can catch this guy, why can’t you catch another?” He said platforms should be able to show how their monitoring tools and enforcement practices work.

The committee cited a recent analysis that identified more than 80 instances of potential insider trading on a major prediction market. Last month, the Senate unanimously approved a resolution barring senators and their staff from participating in prediction markets that allow bets on political outcomes, policy decisions or other events that could be influenced by advance government knowledge.

Kalshi and Polymarket have told regulators and users they are enhancing surveillance and compliance programs to identify and remove insider traders. Comer’s letters request documentation showing how those programs operate, how suspicious activity is flagged and reviewed, and what penalties or account controls are applied when suspected insider trading is detected.

As the majority on the House Oversight Committee, Republican leaders have the authority to compel testimony or documents if voluntary compliance is insufficient. The committee did not set a public deadline in its announcement. Depending on the results of the document review, the committee could seek additional testimony from company executives, users or government officials involved in oversight of financial or national-security matters related to prediction markets.