The U.S. House of Representatives Launches Insider Trading Investigation into Kalshi and Polymarket

On May 22, CNBC reported that James Comer, Chairman of the U.S. House Committee on Oversight and Reform, announced an insider trading investigation into prediction market platforms Kalshi and Polymarket. Comer has sent letters to the CEOs of both companies requesting documents related to identity verification, geographic restrictions, and monitoring protocols for unusual transactions. Comer stated that internal records of the prediction market platforms are the only way to identify violators and assess whether the platforms are fulfilling their legal obligations. The investigation focuses on how the platforms prevent insider trading and the identity verification process for international accounts. The announcement comes amid a string of prior suspicious incidents involving the two platforms. Previously, a U.S. soldier was arrested for using insider information to bet on a change in the Venezuelan government, netting around $400,000 in profits. The New York Times recently reported that over 80 Polymarket users participated in suspicious trading activities, including placing bets hours before the U.S. launched strikes on Iran. Additionally, Kalshi had earlier suspended the accounts of three congressional candidates for betting on their own election results. Comer has asked both companies to submit all relevant information by June 5.