Comer launches Congress probe into insider trading on Kalshi, Polymarket

Rep. James Comer, R-Ky., chair of the House Oversight and Government Reform Committee, announced Friday on CNBC’s “Squawk Box” that he is seeking information from the CEOs of Kalshi and Polymarket on their efforts to prevent insider trading on their platforms.

Comer’s probe is the latest in a series of congressional attempts to rein-in the platforms.

“Internal records held by prediction market platforms are the only means by which bad actors can be identified and to determine whether platforms are meeting their legal obligations,” Comer wrote in a letter sent Friday to Polymarket CEO Shayne Coplan and seen by CNBC. A similar letter, also seen by CNBC, was sent Friday to Kalshi CEO Tarek Mansour.

“Therefore, the Committee requests documents and information to better understand how Polymarket implements identity verification for domestic and international account holders, enforces geographic restrictions, and detects anomalous trading activity to prevent insider trading across its global platform,” Comer’s letter continues.

CNBC has reached out to both Kalshi and Polymarket for comment.

Prediction markets like Kalshi and Polymarket have exploded in popularity and drawn increasing scrutiny from federal and state lawmakers and regulators. They allow users to place bets on the outcome of specific events in a variety of areas, including sports games, elections, awards shows and government actions.

After a series of highly publicized bets on world and political events, Comer, in his appearance on CNBC, said “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.”

“So we want to not only launch an investigation to see how widespread this has been thus far, but also to prove a case that we’ve got to pass some type of legislation,” Comer said. “And I think it wouldn’t be too much to ask to say members of Congress can’t participate in the predictions market, nor can government employees or people in the president’s administration.”

Kalshi is headquartered in New York City and is regulated by the Commodity Futures Trading Commission. It does not allow users to place bets anonymously, a contentious feature of some other platforms, including Polymarket, that operate outside the U.S.

While Polymarket also has offices in the U.S., it’s a blockchain-based platform run by an entity licensed in Panama. It has a limited U.S. product regulated by the CFTC, but its international operations are not overseen by U.S. regulators. 

Both companies earlier this year announced…