US lawmakers have launched a formal investigation into potential insider trading on prediction market platforms, with House Oversight Committee Chair James Comer demanding records from the leaders of Polymarket (POLY) and Kalshi.
US Congress Starts Insider-Trading Probe on Prediction Markets
22 May 2026 - 15:30 CEST
By Matt Neill
The Kentucky Republican announced the probe on CNBC's Squawk Box, citing risks that government officials with non-public information were profiting on event contracts linked to policy and geopolitical developments. Prediction markets allow participants to bet on real-world outcomes, often using crypto collateral, and have gained popularity for their ability to aggregate crowd wisdom into efficient probability forecasts on elections, policy and news events.
Key cases cited
Comer detailed several incidents in letters to Polymarket chief executive Shayne Coplan and Kalshi chief executive Tarek Mansour. Both received demands for documents and communications on identity verification, geographic restrictions and anomalous trading detection by 5 Jun.
A US special forces soldier faced charges in April for allegedly using classified intelligence on a planned operation involving Venezuelan President Nicolás Maduro to generate roughly $410,000 in profits on Polymarket. The decentralized platform settles contracts via the UMA decentralized oracle and governance protocol.
Suspicious trading patterns also appeared hours before US and Israeli strikes on Iran. Kalshi, a fully CFTC-regulated prediction market headquartered in New York, suspended three congressional candidates in April after they bet on their own election races.
Regulatory, compliance differences
Kalshi operates as a CFTC-registered Designated Contract Market with full federal oversight. Polymarket runs its primary platform through a Panama-licensed entity and offers only a limited CFTC-compliant product for US users. Comer's letter flagged this dual structure as potentially enabling exploitation by individuals with national security clearances.
The congressional probe coincides with a security incident at Polymarket. A compromised six-year-old private key drained approximately $574,000 from an internal operations wallet on the Polygon network – a layer-2 scaling solution for Ethereum that provides faster, lower-cost transactions.
Polymarket's vice president of engineering, Josh Stevens, said on X that no user funds or UMA contracts were impacted and that the key had been rotated. The breach contributes to a pattern of prior operational issues at the platform.
Industry growth adds scrutiny
Prediction markets have seen explosive expansion, with Polymarket and Kalshi together surpassing $150bn in combined lifetime trading volume by early May 2026. Bernstein analysts project total sector volumes could reach $240bn in 2026, driven by strong interest in politics, sports and macro events.
The investigation layers onto the CFTC's push for exclusive federal jurisdiction. The agency has sued Arizona, Connecticut, Illinois, New York and Wisconsin over state-level restrictions and issued a May no-action letter providing standardized reporting relief for event-contract operators.
Comer framed the review as necessary for market integrity. "There is 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," he said.
