The House Oversight Committee is launching a congressional probe into insider trading safeguards on prediction-market platforms Kalshi and Polymarket, demanding documents on how users are verified, how geographic restrictions are enforced, and how anomalous trades are detected.

Chairman Comer raises concerns that government workers with non-public information could profit from prediction markets and suggests potential new rules to limit participation by lawmakers and government employees.

The investigation follows reports of suspected insider trading tied to Polymarket and Kalshi, including bets connected to geopolitical events and a California election, underscoring broader regulatory scrutiny.

Examples cited include bets on U.S. military targets and the duration of the Iran war, illustrating the wide range of topics offered on these platforms.

Industry critics point to a surge in prediction-market popularity while noting that some profitable bets appear improbably accurate.

Regulators are weighing these platforms as potential gambling proxies, with the probe adding pressure that could shape future regulatory approaches.

The inquiry follows notable incidents, including a U.S. soldier’s arrest over Polymarket bets based on classified information and Kalshi fines of politicians for betting on their own races.

Industry context shows expanding interest as FiscalNote’s CQ/Roll Call parent company moves into political prediction markets, signaling broader attention and regulatory scrutiny.

Polymarket rose to prominence during the 2024 election as a live indicator of candidate viability, while Kalshi operates as a CFTC-regulated platform with a range of event contracts.

Industry voices stress ongoing efforts to improve detection and reassure regulators that platforms can root out insider trading, even as skepticism remains.

Analysts warn of national security implications if insiders can exploit market trades, with some noting unusually high win rates as red flags.

Insider-trading concerns extend to geopolitical-event markets that react rapidly to policy decisions and military updates.