The U.S. House Oversight Committee has launched a formal investigation into prediction market platforms Polymarket and Kalshi over evidence that government employees may be exploiting classified information to profit from policy and national security events. Rep. James Comer, the committee chair, sent letters Friday to both platforms demanding information on user verification, trading patterns, and safeguards against insider trading. The probe follows analysis by onchain intelligence firm Bubblemaps flagging 80 bets on Polymarket with a 98% win rate, suggesting non-random profit patterns that cannot be explained by chance alone.
Congressional Concern Over Classified Access
Comer appeared on CNBC’s Squawk Box to detail the scope of the investigation, stating 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.” The House Oversight Committee is examining how widespread insider trading has been and plans to develop legislation restricting government participation in prediction markets. Comer indicated that proposed rules would bar members of Congress, administration officials, and all federal employees from trading on policy outcomes. The investigation reflects growing concern that prediction markets have created a direct financial incentive for officials with access to classified information to monetize that advantage.
Prediction Markets Hit $51 Billion in 2026 Growth
Prediction market volumes reached $51 billion in 2025 and are projected to hit $240 billion in 2026, according to Bernstein research cited in the investigation. Platforms like Polymarket and Kalshi enable users to trade on outcomes ranging from election results to Fed policy decisions to geopolitical conflicts. This explosive growth has attracted both retail traders and institutional participants, but also created systemic risks. The Senate Commerce Committee, chaired by Sen. Ted Cruz, held a separate hearing Wednesday on prediction markets, addressing concerns about sports cheating scandals and aggressive marketing targeting youth. Sen. John Hickenlooper participated in the hearing, signaling bipartisan legislative interest in regulating the sector.
National Security and Insider Trading Risks
Congressional investigators are treating prediction market insider trading as a national security issue, not merely a market integrity problem. Officials with access to classified information about military operations, diplomatic negotiations, or economic policy could profit substantially by placing bets before public disclosure. Nicolas Vaiman, CEO of Bubblemaps, stated that “not even luck can explain those wins” when analyzing the flagged bets on Polymarket. The 98% win rate on 80 identified trades suggests algorithmic or information-based edge rather than random success. This pattern mirrors concerns regulators have raised about traditional insider trading, but prediction markets lack the robust surveillance and enforcement infrastructure of stock exchanges.
Legislation Likely as Investigation Proceeds
Comer has signaled that legislation restricting government employee participation in prediction markets is forthcoming. No timeline for investigation completion has been announced, and Polymarket and Kalshi have not yet publicly responded to the committee’s demands. The platforms face pressure to implement identity verification, source-of-funds checks, and trading surveillance systems that can flag suspicious patterns. Prediction markets are projected to reach $1 trillion in peak volumes by 2030, meaning regulatory decisions made now will shape the infrastructure of the sector for the next decade.
