A congressional oversight committee in Washington, D.C. has launched a probe into allegations of insider trading at prediction markets Kalshi and Polymarket.
Rep. James Comer, who is chair of the House Oversight and Government Reform Committee, is seeking information from Kalshi and Polymarket on their efforts to prevent insider trading on their platforms.
Comer’s probe is the latest attempt by Congress to reign-in prediction markets that let people bet on real world events such as wars and elections and are growing in popularity.
Kalshi and Polymarket have drawn scrutiny from federal and state lawmakers in America over concerns they allow people to profit from insider information not available to the public.
Kalshi is headquartered in New York City and is regulated by the Commodity Futures Trading Commission (CFTC), a federal agency.
Management at Kalshi say their platform doesn’t allow users to place bets anonymously, a feature of other platforms, including Polymarket, that operate outside the U.S.
Polymarket has offices in the U.S., but its blockchain-based platform is run out of Panama. As such, its operations are not overseen by U.S. regulators.
Both companies earlier this year announced that they were strengthening their internal controls after several controversial trades were made on their platforms.
Last month, a U.S. soldier was arrested for using insider information to bet on Polymarket about the ouster of Venezuelan leader Nicolas Maduro, netting himself $400,000 U.S.
Kalshi says it doesn’t allow event contracts related to war or death. But several political candidates have been caught betting on their own congressional races on the platform.
In response, members of Congress have introduced a flurry of legislation aimed at reigning in prediction markets. So far, none have moved forward in a meaningful way.
Both Kalshi and Polymarket are privately held and their stocks don’t trade on a public exchange.
