Rep. James Comer, chairman of the Home Oversight and Authorities Reform Committee, has opened a congressional investigation into prediction market firms Kalshi and Polymarket over considerations that merchants may very well be utilizing confidential authorities data 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 information associated to consumer verification programs, suspicious buying and selling detection strategies, and restrictions aimed toward offshore entry.
Comer mentioned the inquiry throughout an look on CNBC’s “Squawk Field,” the place he mentioned lawmakers are more and more frightened about authorities officers probably utilizing privileged data to put worthwhile trades.
“There’s a priority now that members of Congress, members of the president’s administration, any sort of presidency worker, can use fundamental insider information and make big income on something authorities associated,” 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 exhibits, and authorities selections. Billions of {dollars} have reportedly flowed via the markets as participation expanded globally.
Committee Seeks Data on Person Monitoring
In letters despatched Friday, Comer wrote that the committee is reviewing “the adequacy of firm safeguards” designed to cease customers from bypassing U.S. laws and fascinating in insider buying and selling exercise.
“Inner information held by prediction market platforms are the one means by which unhealthy actors may be recognized and to find out whether or not platforms are assembly their authorized obligations,” Comer wrote.
The committee requested each firms to offer 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 Buyer insurance policies, inner reporting procedures for suspicious trades, and knowledge linked to markets tied to army operations.
The inquiry additionally seeks data relating to whether or not customers with U.S. authorities safety clearances are collaborating on the platforms.
Comer acknowledged that Congress might must take legislative motion as considerations surrounding insider buying and selling proceed to develop.
“So we need to not solely launch an investigation to see how widespread this has been up to now, but additionally to show a case that we’ve received to move some sort of laws,” Comer mentioned. “And I feel it wouldn’t be an excessive amount of to ask to say members of Congress can’t take part within the predictions market, nor can authorities staff or individuals within the president’s administration.”
The committee requested that every one related information and communications be submitted by June 5.
Trades Linked to Army and Political Occasions 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 attainable use of nonpublic data.
One case concerned a U.S. Military soldier accused of utilizing confidential data 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. Stories acknowledged that Gannon Van Dyke bought $33,000 in “sure” contracts tied to a market predicting Maduro’s elimination from workplace by Jan. 31, 2026.
A separate New York Instances 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.
Stories additionally indicated that 9 Polymarket accounts earned a mixed $2.4 million via bets linked to attainable U.S. army involvement in Iran.
Comer’s letter to Coplan acknowledged that the speedy growth of cryptocurrency-based prediction markets and the anonymity accessible on some platforms might have created alternatives for misuse by individuals with entry to delicate data.
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 collaborating 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 Buying and selling Fee, doesn’t allow nameless betting. Polymarket operates via a Panama-licensed entity and maintains a restricted U.S. product regulated by the CFTC, whereas its worldwide operations fall outdoors U.S. oversight.
Corporations Reply as Lawmakers Push for Guidelines
Representatives for each firms defended their compliance and monitoring programs following Comer’s announcement.
Elisabeth Diana, Kalshi’s head of communications, mentioned the corporate is ready to cooperate with lawmakers. “We look ahead to partaking with the Committee and its members concerning the programs and processes that we now have spent years constructing,” Diana mentioned. “As a US-regulated change we’re pleased with our complete protections in opposition to insider buying and selling,” she added.
A spokesperson for Polymarket additionally emphasised the corporate’s oversight framework. “Polymarket maintains a complete market integrity framework. We look ahead to partaking 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 control prediction markets. Bipartisan lawmakers have launched a number of payments concentrating on insider buying and selling considerations 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 firms. In a Might 11 letter, the group wrote, “The American public has a professional curiosity in realizing whether or not people entrusted with labeled nationwide safety data have used that entry for private monetary acquire.”
Different actions have additionally emerged in latest months. The Senate reportedly barred members and workers from collaborating in prediction markets, whereas White Home staff obtained warnings in April stating that buying and selling with inside data might represent a felony offense.
In the meantime, the Senate Commerce Committee lately examined client safety considerations tied to sports activities contracts on prediction market exchanges. A number of states are additionally concerned in authorized disputes involving Kalshi, Polymarket, and the Commodity Futures Buying and selling Fee.
