House Oversight Committee Probes Insider Trading on Prediction Markets as Kalshi Tops 200 Investigations
Updated
Updated · abcnews.com · May 28
House Oversight Committee Probes Insider Trading on Prediction Markets as Kalshi Tops 200 Investigations
8 articles · Updated · abcnews.com · May 28
More than a dozen House Oversight Committee letters launched a probe into what lawmakers called a growing pattern of insider trading on prediction platforms including Kalshi and Polymarket.
Kalshi says policing abuse is now its No. 1 priority, with more than 200 investigations opened last year and that total already surpassed in the first quarter of 2026.
The scrutiny follows fresh criminal cases: a Google employee was charged Wednesday with making more than $1 million on Polymarket bets using internal search data, while special forces soldier Gannon Van Dyke has pleaded not guilty in a separate case.
The CFTC says more actions are coming, but it has brought only one enforcement case in 2026 so far and has shrunk about 25% since last year, fueling doubts it can oversee markets tied to politics, sports and entertainment.
That pressure is feeding bipartisan legislation that could ban broad categories of contracts, underscoring an industry paradox: the same information edge that makes prediction markets useful can also make them vulnerable to insider trading.
With high-risk products launching, are prediction markets becoming the next financial crisis trigger?
Can 'truth machine' markets survive when their design inherently rewards insider trading?
Inside the Congressional Probe: How Insider Trading Scandals Are Forcing New Rules for Prediction Markets in 2026
Overview
The prediction market industry, especially platforms like Kalshi and Polymarket, is facing intense scrutiny from Congress due to rising concerns about insider trading. This probe was triggered when several political candidates were caught betting on their own races, leading Kalshi to suspend three candidates. In response, Representative James Comer sent a letter to Kalshi, questioning whether their rapid global expansion ensures the same strict identity checks and insider trading rules for international users as for domestic ones. These incidents have fueled a broader congressional investigation, highlighting the urgent need for stronger oversight and regulation in prediction markets.