Republican Rep. James Comer, R-Ky., launched a congressional investigation Friday into alleged insider trading and market manipulation on online prediction markets.
Comer, chair of the House Committee on Oversight and Government Reform, sent letters to prediction market platforms Kalshi and Polymarket seeking documents and information about how the companies monitor suspicious trades, verify users and prevent insider trading.
“We are examining the adequacy of company safeguards to prevent access to offshore sites to circumvent compliance with applicable U.S. federal regulations governing prediction market platforms,” Comer said in the letters.
“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,” he said.
Comer said the committee is investigating whether users are exploiting classified information to trade on sensitive events, including military operations and political developments. He also raised concerns about whether offshore users are circumventing U.S. regulations through anonymous or foreign accounts.
“This growing pattern of insider trading activity on prediction market platforms indicates that Congressional action may be necessary,” Comer said.
Comer’s letters request information about identity verification procedures for domestic and international users, enforcement of geographic restrictions and how the companies detect “anomalous trading activity.” The committee also asked whether current safeguards are sufficient to stop government officials or insiders from using privileged information for financial gain.
Kalshi said it plans to cooperate with the committee and defended its “comprehensive protections against insider trading.”
Polymarket said in a statement that it 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,” a spokesperson for Polymarket said.
The investigation comes as prediction markets have rapidly expanded in popularity and legal influence, particularly during election cycles. Platforms such as Kalshi and Polymarket allow users to place trades on outcomes ranging from presidential races to Federal Reserve decisions.
The probe also follows growing scrutiny of prediction markets after reports of suspicious trading activity linked to international conflicts and government actions.
In April, Kalshi suspended three political candidates after determining they violated platform rules by betting on their own elections. Last month, a U.S. Army Special Forces soldier was charged with using classified intelligence to place bets on Polymarket tied to the operation to capture ousted Venezuelan President Nicolás Maduro, allegedly netting more than $400,000.
The Senate unanimously approved a bipartisan measure in April banning senators and Senate staff from trading on prediction market platforms after concerns that users may have profited from advance knowledge tied to the war in Iran.
Both Kalshi and Polymarket have recently moved to tighten compliance rules. The companies say they have strengthened ID requirements, expanded monitoring for suspicious trading activity and increased restrictions on users attempting to bypass geographic or regulatory limits.
The Trump administration has pushed back aggressively against state efforts to regulate or ban prediction markets, arguing the platforms fall under exclusive federal oversight. The administration sued Minnesota on Tuesday after Democratic Gov. Tim Walz signed the nation’s first statewide ban on prediction markets such as Kalshi and Polymarket into law.
Federal regulators argued in court filings that Congress gave the Commodity Futures Trading Commission sole authority to regulate the industry.
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