Share 
US Rep. James Comer (R-KY), chairman of the House Committee on Oversight and Government Reform, has announced a new investigation into alleged insider trading on prediction market platforms.
The investigation comes at a time of increased scrutiny of companies like Kalshi and Polymarket, especially in the wake of the US soldier scandal. Master Sgt. Gannon Ken Van Dyke snagged over $400,000 on well-timed Polymarket contracts predicting Venezuelan President Nicolas Maduro’s ouster. He was a part of the US Special Forces detachment that participated in the operation.
In announcing the investigation, Comer specifically cited the ability of prediction markets’ security protocols to skirt federal law:
“The Committee on Oversight and Government Reform is examining the use of online prediction market platforms by some users to conduct insider trading. Specifically, we are examining the adequacy of company safeguards to prevent access to offshore sites to circumvent compliance with applicable US federal regulations governing prediction market platforms.”
Cooperation letters sent, not subpoenas
No subpoenas have been issued so far. Comer sent letters to both Polymarket CEO Shayne Caplan and Kalshi CEO Tarek Mansour, seeking cooperation with the committee’s objectives.
Comer said the committee is looking to understand how these prediction outlets perform identity verification of account-holders in the US and abroad, as well as the methods by which geographic restrictions are enforced and suspicious activity is monitored.
“Internal records held by prediction market platforms are the only means by which bad actors can be identified and to determine whether platforms are meeting their legal obligations. This growing pattern of insider trading activity on prediction market platforms indicates that congressional action may be necessary.”
Integrity hearing
Comer’s announcement of the investigation comes on the heels of a weeklong hearing by the Senate Commerce, Science, and Transportation Committee. Dubbed “No Sure Bets: Protecting Sports Integrity in America,” the committee heard from a five-person panel, including former US Rep. Patrick McHenry, who is now a senior advisor to the Coalition for Prediction Markets.
The goal of that hearing was to differentiate between legal sports betting platforms and prediction markets, and if the latter should continue to be regulated by the federal Commodity Futures Trading Commission.
Comer’s investigation is focused directly into the insider trading risk that prediction markets present.
He cited a New York Times article that identified more than 80 Polymarket users who had placed suspicious trades, which included classified operations by the US and Israel in Iran.
