House Oversight launches insider trading probe into Polymarket and Kalshi

House Oversight and Government Reform Committee Chair @RepJamesComer sent letters on Friday to the chief executives of @Polymarket and @Kalshi, formally opening an investigation into whether users of the two prediction market platforms have been exploiting non-public information to place profitable trades.

What the investigation covers

In the letters, Comer requests documents and information to assess how the platforms verify the identities of domestic and foreign account holders, enforce geographic restrictions, and monitor suspicious trading activity to guard against insider trading. Both platforms have been given two weeks to comply. Comer warned that the cryptocurrency infrastructure and the anonymity it affords users "may have created unintended structural conditions that bad actors, especially individuals with national security clearances, can exploit."

Comer has also signaled he may pursue legislation to bar members of Congress, administration officials, and other government employees from participating in prediction markets. "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 told CNBC.

The cases that triggered the probe

A U.S. Army Special Forces master sergeant was arrested in April for allegedly using classified information to make highly profitable bets on Polymarket related to the American military mission that captured Venezuelan leader Nicolás Maduro. The sergeant, Gannon Ken Van Dyke, was involved in the planning and execution of Operation Absolute Resolve, which apprehended Maduro and his wife in early January. In total, Van Dyke allegedly profited approximately $409,881.

According to a recent New York Times investigation, more than 80 Polymarket users placed suspiciously timed bets, including wagers made hours before undisclosed U.S. and Israeli military operations against Iran, raising concerns that safeguards across prediction market platforms may be inadequate.

In April, Kalshi suspended three congressional candidates who wagered on their own candidacies. The prediction market platform now bans members of Congress from creating accounts.

Both companies responded to the probe with measured statements. "As a US-regulated exchange we are proud of our comprehensive protections against insider trading," said Kalshi's head of communications, Elisabeth Diana. A spokesperson for Polymarket said the company "maintains a comprehensive market integrity framework" and looks forward to engaging with the committee "on how our platform is a pioneer in transparency."

Prediction market volumes could peak at roughly $1 trillion by 2030 as the sector evolves from niche wagering into broad-based information markets, according to a Bernstein report from April. Volumes hit $51 billion last year and could reach about $240 billion in 2026. "This growing pattern of insider trading activity on prediction market platforms indicates that Congressional action may be necessary," Comer concluded.

Sources:
House Oversight Committee: Comer Launches Investigation Into Insider Trading on Prediction Market Platforms
CNBC: Oversight Chairman Comer launches congressional probe into insider trading on Kalshi, Polymarket
U.S. Department of Justice: U.S. Soldier Charged With Using Classified Information To Profit From Prediction Market Bets