Representative James Comer, Republican of Kentucky and chairman of the House Oversight and Government Reform Committee, announced a formal investigation into prediction market platforms Polymarket and Kalshi on May 22 — demanding that the CEOs of both companies explain how their platforms detect and prevent insider trading, in a probe triggered by a series of suspicious trades tied to classified US military operations and geopolitical events.
Comer, who announced the investigation on CNBC’s Squawk Box, sent formal letters to the leadership of both platforms seeking information on how they verify user identities, enforce bans on users from restricted jurisdictions, and identify unusual trading patterns that could indicate exploitation of non-public information, per CNBC’s reporting. The inquiry marks a significant escalation of congressional scrutiny that has been building across both parties for months.
The Evidence That Triggered The Probe
The specific trading patterns that prompted the investigation are difficult to dismiss as coincidence. A US special forces soldier was arrested for placing insider trades on Polymarket tied to the US military incursion into Venezuela that resulted in the capture of President Nicolás Maduro — bets placed hours before the operation became public knowledge, per The Hill’s reporting.
A separate trader accumulated nearly $1 million with a 93% success rate on wagers predicting unannounced US and Israeli operations against Iran, placing bets hours before strikes in October 2024, June 2025, and February 2026, according to a CNN report cited by Democratic lawmakers in a letter to Comer.
The February 28 incident is the most striking data point. A group of 38 accounts collectively netted more than $2 million on bets tied to that day’s Iran strikes — with the accounts preloaded with funds the preceding week, per the Democratic lawmakers’ letter. On April 7, at least 50 newly created accounts placed coordinated bets on a US-Iran ceasefire, some opened minutes before the announcement, per the same letter.
Polymarket separately reported suspicious activity across nearly 50 accounts in advance of the US-Iran ceasefire talks, per casino.org’s reporting of the congressional correspondence.
Both Platforms Push Back
Kalshi responded through its head of communications, Elisabeth Diana, who said the company looks forward to engaging with the committee and described its protections against insider trading as comprehensive, per CNBC. Polymarket did not immediately respond to a request for comment at the time of publication.
Both platforms announced updated rules and surveillance tools in March 2026, restricting politicians from trading on their own campaigns and barring athletes from sports-related contracts — moves that preceded but did not prevent the current congressional escalation.
The investigation lands at a moment of peak political sensitivity for prediction markets. Combined trading volumes on Kalshi and Polymarket reached tens of billions of dollars in March 2026 alone, per TipRanks. Both platforms count Donald Trump Jr. as an advisor. And both spent a combined nearly $1 million on federal lobbying in 2025, per CNBC — a Washington presence that may now complicate rather than protect their regulatory standing.
This development marks a pivotal and potentially consequential moment for the nascent prediction market sector. A formal congressional investigation with documented evidence of military-linked insider trading is a categorically different threat than a regulatory inquiry — and the outcome could reshape how these platforms operate, who can participate, and whether the CFTC’s current oversight framework survives intact.
Cover image from Grok, ETHUSD chart from Tradingview
