The U.S. House Committee on Oversight and Government Reform has opened an investigation into Polymarket and Kalshi over concerns tied to insider trading and wagers allegedly linked to classified information.
Summary
- James Comer launched a congressional probe into Polymarket and Kalshi over suspected insider trading and classified-information betting activity.
- Lawmakers cited reports of suspicious Iran-related wagers and a federal case involving a U.S. Army sergeant accused of using classified information to make over $409,000 in prediction market profits.
- The investigation comes as Polymarket faces mounting pressure from regulators and a recent suspected exploit tied to its UMA CTF Adapter contract on Polygon.
According to a statement released by the committee, Chair James Comer sent formal letters to Polymarket CEO Shayne Coplan and Kalshi CEO Tarek Mansour requesting internal records and compliance details related to user activity on their platforms.
The committee said it wants to assess how the companies detect suspicious trading, verify customer identities, and enforce geographic restrictions designed to comply with U.S. regulations.
In the letters, Comer said prediction market operators hold the internal data needed to identify whether users are trading with access to non-public information. He also raised concerns that offshore platforms may be allowing users to bypass federal compliance rules.
Congressional scrutiny intensified after a New York Times investigation cited more than 80 Polymarket users who allegedly placed unusually timed bets ahead of undisclosed U.S. and Israeli military operations involving Iran. Committee documents said those trades have raised questions about whether safeguards on prediction market platforms are sufficient to stop insider activity.
Federal prosecutors have already filed charges in one case highlighted by lawmakers. According to the committee, U.S. Army Master Sergeant Gannon Ken Van Dyke allegedly used classified information tied to “Operation Absolute Resolve,” an operation connected to Venezuelan President Nicolás Maduro, to place prediction market wagers that generated more than $409,000 in profits.
Why are lawmakers focusing on prediction markets now?
The House investigation arrives as prediction markets face pressure from regulators in multiple countries. Earlier this year, Minnesota became the first U.S. state to ban prediction markets after lawmakers classified them as illegal gambling operations.
Outside the United States, authorities in South Korea have also examined Polymarket over concerns tied to gambling-related content.
In India, the Ministry of Electronics and Information Technology ordered internet providers to block access to Polymarket after categorizing prediction markets as prohibited online money gaming platforms under the country’s Promotion and Regulation of Online Gaming Act 2025.
Indian regulators have argued that platforms allowing users to speculate on uncertain outcomes with real money expose younger users to gambling-related risks. Government policy discussions have also linked crypto-based prediction markets to concerns over stablecoin flows and unmonitored capital movement outside the banking system.
At the same time, Argentina, Colombia, and Romania have all restricted access to Polymarket after local authorities concluded that the platform operated outside domestic gambling frameworks.
How does the latest probe add pressure on Polymarket?
The congressional investigation comes only days after on-chain analysts flagged a suspected exploit involving Polymarket’s UMA CTF Adapter contract on Polygon. Blockchain investigator ZachXBT warned users after suspicious activity drained more than $520,000 from addresses tied to the contract.
Security firm PeckShield later said part of the stolen funds had already been moved through ChangeNOW. Blockchain analytics platform Bubblemaps separately reported that attackers were removing 5,000 POL tokens roughly every 30 seconds during the incident.
Polymarket contributor Shantikiran Chanal said the incident appeared linked to a compromised private key used for internal operations rather than a failure in the platform’s core contracts or market resolution systems. Chanal added that user funds and active markets remained safe during the incident.
The latest events have added technical security concerns to ongoing debates surrounding market integrity, oracle voting power, and the legal status of crypto-based prediction platforms.
