Rep. James Comer, chairman of the House Oversight and Government Reform Committee, has opened a congressional investigation into prediction market companies Kalshi and Polymarket over concerns that traders could be using confidential government information to profit from bets tied to political and geopolitical events.

The Kentucky Republican announced Friday that the committee had sent letters to Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan requesting records related to user verification systems, suspicious trading detection methods, and restrictions aimed at offshore access.

Comer discussed the inquiry during an appearance on CNBC’s “Squawk Box,” where he said lawmakers are increasingly worried about government officials potentially using privileged information to place profitable trades.

“There’s a concern now that members of Congress, members of the president’s administration, any type of government employee, can use basic insider knowledge and make huge profits on anything government related,” Comer said.

The investigation arrives as prediction markets continue to attract attention from regulators and lawmakers. The platforms allow users to wager on future outcomes tied to elections, sports contests, weather events, awards shows, and government decisions. Billions of dollars have reportedly flowed through the markets as participation expanded globally.

Committee Seeks Records on User Monitoring

In letters sent Friday, Comer wrote that the committee is reviewing “the adequacy of company safeguards” designed to stop users from bypassing U.S. regulations and engaging in insider trading activity.

“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,” Comer wrote.

The committee asked both companies to provide documents explaining how they verify the identities of domestic and international users, enforce geographic restrictions, and monitor unusual trading patterns. Comer also requested details regarding Know Your Customer policies, internal reporting procedures for suspicious trades, and information connected to markets tied to military operations.

The inquiry also seeks information regarding whether users with U.S. government security clearances are participating on the platforms.

Comer stated that Congress may need to take legislative action as concerns surrounding insider trading continue to grow.

“So we want to not only launch an investigation to see how widespread this has been thus far, but also to prove a case that we’ve got to pass some type of legislation,” Comer said. “And I think it wouldn’t be too much to ask to say members of Congress can’t participate in the predictions market, nor can government employees or people in the president’s administration.”

The committee requested that all relevant records and communications be submitted by June 5.

Trades Linked to Military and Political Events Draw Scrutiny

Federal lawmakers have intensified scrutiny of prediction markets after several trades connected to political and military developments raised questions about the possible use of nonpublic information.

One case involved a U.S. Army soldier accused of using confidential information tied to the capture of former Venezuelan leader Nicolás Maduro. Authorities alleged the soldier placed bets on Polymarket that generated approximately $400,000 in profits. Reports stated that Gannon Van Dyke purchased $33,000 in “yes” contracts tied to a market predicting Maduro’s removal from office by Jan. 31, 2026.

A separate New York Times investigation cited by the committee identified more than 80 Polymarket users whose trades showed suspicious characteristics. Some bets were reportedly placed shortly before U.S. and Israeli military strikes in Iran.

Reports also indicated that nine Polymarket accounts earned a combined $2.4 million through bets connected to possible U.S. military involvement in Iran.

Comer’s letter to Coplan stated that the rapid expansion of cryptocurrency-based prediction markets and the anonymity available on some platforms may have created opportunities for misuse by people with access to sensitive information.

Kalshi also drew congressional attention after several political candidates reportedly wagered on their own races. In April, the company suspended three congressional candidates for participating in such trades. The committee also referenced California gubernatorial candidate Kyle Langford purchasing contracts tied to his own campaign.

Kalshi, which is headquartered in New York and regulated by the Commodity Futures Trading Commission, does not permit anonymous betting. Polymarket operates through a Panama-licensed entity and maintains a limited U.S. product regulated by the CFTC, while its international operations fall outside U.S. oversight.

Companies Respond as Lawmakers Push for Rules

Representatives for both companies defended their compliance and monitoring systems following Comer’s announcement.

Elisabeth Diana, Kalshi’s head of communications, said the company is prepared to cooperate with lawmakers. “We look forward to engaging with the Committee and its members about the systems and processes that we have spent years building,” Diana said. “As a US-regulated exchange we are proud of our comprehensive protections against insider trading,” she added.

A spokesperson for Polymarket also emphasized the company’s oversight framework. “Polymarket maintains a comprehensive market integrity framework. We look forward to engaging with Chairman Comer and the committee on how our platform is a pioneer in transparency,” the spokesperson said.

The congressional probe follows broader efforts in Washington to regulate prediction markets. Bipartisan lawmakers have introduced multiple bills targeting insider trading concerns and other betting-related activity tied to the platforms.

Earlier this month, seven Democratic lawmakers led by Rep. Chris Pappas urged Comer to subpoena both companies. In a May 11 letter, the group wrote, “The American public has a legitimate interest in knowing whether individuals entrusted with classified national security information have used that access for personal financial gain.”

Other actions have also emerged in recent months. The Senate reportedly barred members and staff from participating in prediction markets, while White House employees received warnings in April stating that trading with inside information could constitute a criminal offense.

Meanwhile, the Senate Commerce Committee recently examined consumer protection concerns tied to sports contracts on prediction market exchanges. Several states are also involved in legal disputes involving Kalshi, Polymarket, and the Commodity Futures Trading Commission.