In brief
- House Oversight Chairman James Comer released a staff memorandum from an investigation into insider trading by government officials, military personnel and security-clearance holders on prediction markets.
- The memo recommends Congress consider new restrictions on federal personnel—from an outright ban on prediction-market trading to narrower limits on government-related contracts,
- It credited platforms like Polymarket and Kalshi for self-policing.
The chairman of the House Oversight Committee is raising the prospect of barring government officials from trading on prediction markets, citing concerns that insiders are using nonpublic information to profit on platforms like Kalshi and Polymarket.
In a staff memorandum released Friday, the committee detailed an investigation into insider trading by government officials, military personnel and people holding security clearances who have placed bets using information not available to the public.
The probe gathered nearly 1,700 pages of documents and included five bipartisan staff briefings from prediction market platforms about how they detect and report suspicious activity.
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Chairman James Comer framed the issue around public trust. “Americans are rightly concerned about public corruption,” he said, arguing Congress “has a duty to ensure our laws adequately prevent insider trading” and prohibit officials “from profiting from nonpublic information.”
He said lawmakers must weigh “additional reforms to prevent public corruption and restore the American people’s trust in government.”
The memo’s central recommendation is that Congress consider new restrictions on federal personnel, ranging from an outright ban on trading prediction markets to narrower limits on specific contracts, such as those tied to government decisions.
Applying such rules across all branches, the committee argued, would reinforce that government employees shouldn’t financially benefit from access to nonpublic information, and would remove even the appearance of it.
→The memo stressed that existing insider trading laws already apply to prediction markets. It cited the Commodity Exchange Act, as amended by the STOCK Act, which bars federal employees, members of Congress and others from trading commodity futures, options, or swaps on nonpublic information drawn from their positions.
The committee credited the platforms themselves for policing their markets, noting that most reported insider trading incidents were first detected and flagged to regulators by the platforms. It singled out Polymarket, which recently hired a former law enforcement expert and rolled out surveillance software called “PolyGraph” built with analytics firm Chainalysis, and Kalshi for strengthening their detection protocols.
The scrutiny follows a string of cases involving alleged insider trading by public officials and government employees.
A U.S. soldier was charged in April over alleged Polymarket trades tied to a military operation that resulted in the capture of Venezuelan President Nicolas Maduro. Then, in August, the CFTC fined a former White House teleprompter operator for betting on presidential speeches.
The push also lands amid broader pressure on the sector, with the CFTC moving to assert authority over prediction markets in its fight against several states, while Sen. Elizabeth Warren sets her sights on the industry as the incoming Senate Banking chair.
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