US Congress Investigates $24 Billion Prediction Markets as 21 Bills Target Insider Trading and Retail Bets
Updated
Updated · Atlantic Council · Jun 11
US Congress Investigates $24 Billion Prediction Markets as 21 Bills Target Insider Trading and Retail Bets
3 articles · Updated · Atlantic Council · Jun 11
Summary
$24 billion in April trading has pushed Kalshi and Polymarket into Congress’s sights, with lawmakers probing alleged military and political insider trading and weighing whether the platforms should keep operating in their current form.
21 bills already introduced show the debate is shifting from novelty to regulation, with proposals ranging from barring insiders from trading to excluding sports or election contracts and imposing gambling-style rules.
Europe offers one model: ESMA moved in 2018 to block binary options for retail investors, arguing they carry structurally negative expected returns, serve little genuine investment need, and resemble gambling products.
That approach could become a US blueprint by cutting off retail access while preserving institutional hedging, though several European countries have instead forced prediction markets to seek gambling licenses or shut down.
Can regulators stop insider trading on new decentralized platforms like Polymarket?
Will Wall Street still trade on world events if the public is banned from prediction markets?
Are prediction markets the future of forecasting or just a high-tech casino for world events?
Prediction Markets Under Fire: Congressional Investigations, Insider Trading Risks, and the Regulatory Future in 2026
Overview
The prediction market industry is under intense scrutiny after seven Democratic lawmakers, led by Rep. Chris Pappas, sent a letter on May 11, 2026, urging the House Oversight Committee to investigate platforms like Kalshi and Polymarket for insider trading risks. This action triggered a formal inquiry, as lawmakers stressed the public’s right to know if individuals with access to classified information have used it for personal gain. The committee believes only subpoenas can reveal suspicious trades and ensure platforms are meeting their responsibilities, highlighting growing concerns about the integrity and regulation of prediction markets.