Comer launches Congress probe into insider trading on Kalshi, Polymarket

Congress is turning up the heat on prediction markets. Rep. James Comer, the Kentucky Republican who chairs the House Oversight and Government Reform Committee, announced Friday that he is formally seeking information from the CEOs of both Kalshi and Polymarket about their efforts to prevent insider trading on their platforms. The probe marks the most serious congressional investigation yet into the rapidly growing prediction market industry, and it could reshape how these platforms operate in the United States.

Comer's letters to Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan request documents and communications covering identity verification, geographic restriction enforcement, and detection of anomalous trading activity. The committee has set a June 5 deadline for responses, giving both companies roughly two weeks to produce records that could take months to compile.

The investigation did not emerge in a vacuum. In April, Kalshi suspended three congressional candidates who had placed bets on their own races — a form of insider trading that would be illegal in traditional financial markets. More alarmingly, a U.S. soldier was arrested last month for allegedly using classified information to place bets on Polymarket about the ouster of Venezuelan leader Nicolas Maduro, netting approximately $400,000. A New York Times investigation further found that more than 80 Polymarket users made trades with suspicious characteristics, including bets placed hours before U.S. and Israeli military strikes in Iran.

"The rapid growth and mainstreaming of this platform, 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 wrote in his letter to Polymarket's Coplan.

The two platforms present very different regulatory profiles. Kalshi is headquartered in New York City and regulated by the Commodity Futures Trading Commission. It does not allow anonymous betting and prohibits contracts related to war or death. Polymarket, while maintaining U.S. offices, operates primarily as a blockchain-based platform licensed in Panama. Its international operations fall outside U.S. regulatory oversight, though it does offer a limited CFTC-regulated product domestically.

Both companies have acknowledged the problem and announced internal rule changes earlier this year. But Comer's probe suggests that voluntary compliance is no longer enough for Congress. His letter to Kalshi specifically raises concerns about the platform's rapid global expansion to more than 140 countries, questioning whether international users face the same identity verification and insider trading prohibitions as domestic ones.

The investigation also comes on the heels of a May 11 letter from seven Democratic lawmakers, led by Rep. Chris Pappas of New Hampshire, calling on the Oversight Committee to subpoena both platforms. "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," the Democrats wrote. Comer's decision to launch the probe suggests bipartisan pressure is building.

Multiple bills have already been introduced this Congress targeting prediction markets. Some address insider trading specifically; others take broader aim at the platforms' operations, including their expansion into sports betting. The Comer investigation could provide the evidentiary foundation those bills need to move forward.

The core tension here is fundamental. Prediction markets derive their value from information — the more informed the participants, the more accurate the prices. But that same information asymmetry creates an irresistible incentive for insiders to profit. In traditional financial markets, decades of regulation, surveillance, and enforcement have built a framework to detect and punish insider trading. Prediction markets have none of that infrastructure, and Congress is now asking whether they can police themselves.

The answer Comer receives — and the documents these companies produce — could determine whether prediction markets continue their explosive growth or face the kind of regulatory crackdown that fundamentally alters their business model.

**What This Means For You:** If you trade on Kalshi, Polymarket, or any prediction market, this investigation could directly affect your experience. Stricter identity verification, geographic restrictions, and transaction monitoring are almost certainly coming regardless of what Comer finds — the question is how far Congress pushes. Anonymous or pseudonymous trading may become significantly harder. If you hold positions on either platform, pay attention to any policy changes announced in the next 30 days, particularly around account verification requirements. For the broader public, this is a test case for whether a new financial technology can scale faster than the rules designed to keep it honest — and history suggests that when regulators show up this late, the corrective action tends to be swift and substantial.