The US House of Representatives Committee on Oversight and Government Reform has opened an investigation into Polymarket and Kalshi over concerns related to insider trading and betting allegedly tied to confidential information.
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- James Comer launched a congressional investigation into Polymarket and Kalshi over suspected insider trading and betting activities on confidential information.
- The lawmakers cited reports of suspicious bets related to Iran and a federal case involving a US Army sergeant accused of using classified information to make market profits of more than $409,000.
- The investigation comes as Polymarket faces increasing pressure from regulators and a recent suspected exploit linked to its UMA CTF converter contract on Polygon.
According to a statement Released By the committee, Chairman James Comer sent official letters to Polymarket CEO Shane Coplan and Kalshi CEO Tariq Mansour requesting internal records and compliance details related to user activity on their platforms.
The committee said it wants to evaluate how companies detect suspicious trading, verify customer identities, and enforce geographic restrictions designed to comply with US regulations.
In the letters, Comer said prediction market operators maintain internal data needed to determine whether users are trading with access to non-public information. It also raised concerns that third-party platforms could allow users to bypass federal compliance rules.
Congressional scrutiny intensified after a New York Times investigation pointed to more than 80 Polymarket users who allegedly placed unusually timed bets ahead of undeclared US and Israeli military operations involving Iran. The committee documents said that these deals raised questions about whether the guarantees on prediction market platforms were sufficient to stop internal activity.
Federal prosecutors have already brought charges in one case highlighted by lawmakers. According to the commission, U.S. Army Staff Sergeant Gannon Ken Van Dyke allegedly used classified information related to “Operation Absolute Resolve,” an operation linked to Venezuelan President Nicolas Maduro, to place predictive market bets that generated profits of more than $409,000.
Why are lawmakers focusing on prediction markets now?
The House investigation arrives as prediction markets face pressure from regulators in several countries. Earlier this year, Minnesota became the first US state to do so Ban prediction markets After lawmakers classified them as illegal gambling operations.
Outside the United States, authorities in South Korea have also scrutinized Polymarket due to concerns related to gambling-related content.
In India, the Ministry of Electronics and Information Technology ordered internet service providers to block access to Polymarket after prediction markets were classified as banned online financial gaming platforms under the Online Gaming Promotion and Regulation Act 2025 in the country.
Indian regulatory bodies have Argue Platforms that allow users to speculate on uncertain outcomes with real money expose younger users to risks associated with gambling. Government policy discussions have also linked cryptocurrency-based prediction markets to concerns about stablecoin flows and unsupervised movement of capital outside the banking system.
Meanwhile, Argentina, Colombia and Romania have restricted access to Polymarket after local authorities concluded that the platform operated outside local gambling frameworks.
How does the latest probe add pressure to Polymarket?
The congressional investigation comes just days after on-chain analysts flagged a bug Suspected exploitation Includes Polymarket’s UMA CTF converter contracts on Polygon. Blockchain investigator ZachXBT has warned users after suspicious activity drained more than $520,000 from addresses associated with the contract.
Security company PeckShield later said that a portion of the stolen funds had already been transferred through ChangeNOW. Blockchain analytics platform Bubblemaps separately reported that attackers were removing 5,000 POL tokens approximately every 30 seconds during the incident.
Polymarket contributor Shantikiran Chanal said the incident appeared to be related to a compromised private key used for internal operations and not a failure in the platform’s underlying contracts or market resolution systems. Chanal added that users’ funds and active markets remained safe during the incident.
Recent events have added technical security concerns to ongoing discussions about market integrity, oracle voting power, and the legal status of cryptocurrency-based prediction platforms.
