House Oversight Opens Formal Insider-Trading Probe Into Kalshi and Polymarket
Chairman James Comer sent document-demand letters to the CEOs of Kalshi and Polymarket on May 22, with a June 5 deadline, and signaled forthcoming legislation that would bar members of Congress, administration officials, and federal employees from trading prediction-market contracts.
House Oversight and Government Reform Committee Chairman James Comer (R-KY) announced on CNBC's Squawk Box on May 22, 2026 that he has sent formal document-demand letters to Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan. The letters request internal records on how each platform verifies the identities of domestic and foreign account holders, enforces geographic restrictions, and monitors trading for patterns consistent with insider information. Both CEOs were given until June 5 to respond. Comer framed the inquiry directly in his statement: "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."
The probe rests on two pieces of public evidence the committee has cited explicitly. A recent New York Times investigation identified more than 80 Polymarket wallets that placed trades with timing patterns consistent with advance knowledge of major news events, including positions opened hours before US and Israeli strikes in Iran. Separately, the April 2026 arrest of US Army Master Sergeant Gannon Ken Van Dyke for trading roughly $400,000 in profits on Polymarket markets related to the Maduro operation gave the committee a documented criminal case to anchor the investigation. Comer told NOTUS that the current state of the market is "the Wild West."
Comer indicated that the probe is the first step toward legislation that would explicitly bar federal officials from trading event contracts. The proposed framework would parallel existing rules under the STOCK Act for individual securities, but applied to prediction-market contracts, which are currently treated as commodity derivatives and fall outside most government ethics disclosure regimes. New York Governor Kathy Hochul and Illinois Governor JB Pritzker issued state-level executive orders covering the same conduct in late April 2026; a federal statute would close the gap for the executive branch, legislative branch, and the federal contractor workforce, none of which are reached by state orders.
For Kalshi and Polymarket, the immediate question is whether the document production satisfies the committee or escalates to public hearings. Polymarket already cooperated extensively with the Department of Justice in the Van Dyke prosecution, and Kalshi has publicly highlighted its own compliance investments. Both companies have an incentive to produce thorough records on June 5; a perceived stonewall would hand Comer the political momentum to move legislation faster than the industry would like. The deeper risk is the legislation itself: a federal trading ban for government employees would not, on its own, materially shrink platform volume, but it would create a category of forbidden user that platforms have to actively police, exposing them to enforcement actions whenever the policing fails. That is a meaningful new compliance cost layered on top of the existing state-level patchwork.
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Utah Files Felony Charges Against Kalshi and Its Founders — Second State to Criminally Charge a Platform
Utah filed criminal charges against Kalshi and its two co-founders, Tarek Mansour and Luana Lopes Lara, on October 28 — 13 felonies and a misdemeanor, including a second-degree 'pattern of unlawful criminal activity' count and 12 counts of online gambling promotion. The charges stem from a September sting in which an undercover agent placed 12 sports wagers verified to be in Utah. The CFTC sued Utah the day before to block state enforcement, its tenth such suit. Utah is the second state after Arizona to criminally charge Kalshi, and the first to charge the founders personally. Kalshi called it a 'crazy overreach.'
NBA Names Kalshi and Polymarket Preferred Exchanges — Leaving the NFL Alone in Opposition
The NBA announced on October 26 that it has named Kalshi and Polymarket its 'preferred prediction market exchanges,' signed a non-binding memorandum of understanding with the CFTC on basketball integrity, and expanded its DraftKings deal to include prediction markets — the first league to extend a sportsbook partnership into the category. The exchange deals bar league and team personnel from trading NBA contracts, limit permissible markets, and require sharing of suspicious-trading data, in exchange for NBA intellectual property and official data. The NBA joins MLB, the NHL, and MLS as partnered leagues, leaving the NFL as the lone major holdout — and the only league fighting the platforms in court.
CFTC Chair Says Agency Is Watching Prediction Markets for Manipulation Ahead of Midterms
CFTC Chairman Michael Selig said on October 23 that the agency is closely monitoring prediction markets for manipulation ahead of the November 3 midterms, and that it is separately scrutinizing oil market trading tied to President Trump's announcements about the war in Iran. Combined midterm open interest on Kalshi and Polymarket stood at $250 million as of October 18, with Kalshi holding 84%. Selig acknowledged the agency often catches political figures attempting to trade 'oftentimes after the fact.' The remarks highlight the CFTC's dual and somewhat conflicting role as both the platforms' federal protector and their manipulation watchdog, at a time when the agency has shed enforcement staff.