The House Oversight and Government Reform Committee launched a congressional investigation into suspected insider trading on Kalshi and Polymarket on Friday. Committee Chairman James Comer (R-KY) sent letters directly to the CEOs of both platforms, setting a June 5 deadline for documents covering identity verification systems, geographic access controls, and mechanisms for flagging unusual trading activity. "We're starting to request information. That's the process. That's how it begins. We'll request information, and if we have trouble getting it, then a subpoena will follow," Comer said in a statement released by the committee.

The probe had been building for weeks. On May 13, Rep. Chris Pappas (D-NH) delivered a letter co-signed by 53 House Democrats urging Comer to issue subpoenas. The signatories argued that "the American public has a legitimate interest in knowing whether individuals entrusted with classified national security information have used that access for personal financial gain." Pappas separately wrote to Acting Attorney General Blanche and U.S. Attorney Jay Clayton calling for prosecutions against suspected insider traders on both platforms.

The most dramatic case already in the criminal system involves U.S. Army Special Forces Master Sergeant Gannon Ken Van Dyke, who was charged by the DOJ and CFTC with using classified intelligence to place roughly $33,000 in Polymarket bets on the U.S. capture of Venezuelan President Nicolás Maduro. Those bets returned more than $400,000. On-chain analysis, congressional findings, and reporting by CBS News suggest the problem extends well beyond a single soldier. On-chain analytics firm Bubblemaps identified nine interconnected Polymarket accounts that collectively won $2.4 million from Iran-related military bets at a 98% win rate across more than 80 trades. One account alone, labeled "Magamyman," netted approximately $550,000 betting on U.S. strikes against Iran and the removal of Supreme Leader Ayatollah Khamenei. Nicolas Vaiman, CEO of Bubblemaps, called it "the most insane pattern we have found on Polymarket so far." The suspicious activity is traceable precisely because Polymarket operates on the Polygon blockchain, a public ledger where every trade is visible. That transparency, which prediction market advocates have long cited as a feature, is now serving as evidence in both the congressional investigation and federal prosecutions. A separate New York Times investigation identified more than 80 suspicious users across the platforms, further documenting the breadth of the problem.

The allegations go beyond national security leaks. On February 28, 2026, 38 coordinated accounts collectively netted over $2 million from bets tied to a specific military strike date. A cluster of at least 50 newly created accounts placed coordinated bets on a U.S.-Iran ceasefire within minutes of its actual announcement on April 7, 2026. Accounts also correctly predicted Lady Gaga and Ricky Martin as Super Bowl LX halftime performers hours before the news went public, generating estimated profits of up to $3 million across both platforms. A newly created account profited over $50,000 when Venezuelan opposition leader María Cachado won the Nobel Peace Prize; the Nobel Institute is investigating that trade. Kalshi fined and suspended three federal candidates in April for betting on their own election races. Former commodities trader and fraud lawyer David Kovel put the potential scope in stark terms: "We're talking tens of millions, could be $80 million." Kovel was referencing approximately $800 million in suspicious oil futures trades executed on March 23, a separate market from Polymarket, where analysts estimate profits from those trades could have reached up to $80 million, driven by the same Iran intelligence underlying the Polymarket bets.

Both platforms moved to tighten their rules before Congress acted. Polymarket updated its rulebook on March 20 to ban trading on information obtained through "a preexisting duty or obligation of trust or confidence," including secondhand tips. Kalshi followed three days later with technical controls blocking politicians from wagering on their own campaigns and athletes from trading on markets tied to their own leagues. The CFTC issued guidance on March 12 confirming that insider trading on prediction markets violates its anti-fraud rules under Regulation 180.1. Critics, including the 53 House Democrats, view these steps as inadequate given the documented scale of abuse.

The congressional spotlight carries significant consequences for users outside the United States. India presents the most immediate case. Both Kalshi and Polymarket continue to onboard Indian users despite a blanket ban on online money games that took effect under India's PROGA rules on May 1, 2026. The Ministry of Electronics and Information Technology named Polymarket specifically in a warning letter dated April 25. India's Securities and Exchange Board (SEBI) had previously warned that prediction market products offer "no investor protection mechanism," a concern now amplified by the scope of the congressional probe. The scale of Indian engagement is considerable: a single IPL cricket match on May 7 generated $27.7 million in combined volume across both platforms. Kalshi legal counsel Valeria Vouterakou said the platform has not received a formal shutdown order, adding: "We will comply with the government's requests should they make them." Polymarket does not list India as a restricted country; a Polymarket spokesperson stated that the platform "maintains geoblocking measures to restrict access in jurisdictions where our services are not permitted," though India does not appear to be among those restricted jurisdictions. If Comer's document requests result in stricter know-your-customer requirements or mandatory geoblocking, Indian retail users accessing platforms through crypto wallets could face sudden cutoffs with limited legal recourse. Because Polymarket settles trades in USDC on the Polygon network, analysts suggest that any change to wallet-level restrictions could, in principle, affect users across all jurisdictions simultaneously.

The regulatory exposure extends further into Africa as well. Kenya has imposed restrictions on prediction market platforms, and users in Nigeria and South Africa face direct exposure through Polygon-based trading infrastructure. Both the Financial Sector Conduct Authority in South Africa and the Nigerian Securities and Exchange Commission have signaled growing regulatory attention to the sector.

The two platforms sit in structurally different positions before Congress. Kalshi is a CFTC-regulated Designated Contract Market subject to U.S. jurisdiction. Polymarket is an offshore, crypto-native platform that previously allowed anonymous account creation and settled a 2022 civil penalty of $1.4 million with the CFTC for serving U.S. customers without authorization. That asymmetry is now under direct congressional scrutiny, and analysts suggest that any regulatory outcome favoring the licensed model over the offshore one could reshape how global prediction market infrastructure is built and who can access it.