House Oversight Committee Chair James Comer, R-Ky., is calling for new limits or an outright ban on government officials using prediction markets. The Republican chair released a staff memorandum on Friday following an investigation into insider trading risks among government officials, military personnel, and those with security clearances. This probe involved 1,700 pages of documents and five bipartisan staff briefings from prediction market companies.
Insider trading concerns drive the push for reform
The committee recommends that Congress consider restrictions ranging from an outright prohibition on trading to narrower limits on specific contracts tied to government decisions. Applying these rules across all branches would strengthen ethical expectations that government personnel should not personally and financially benefit from access to nonpublic information associated with their work as government servants, according to the memo. This push follows several incidents where officials allegedly used inside information to profit. One U.S. Army soldier faced charges in April over Polymarket trades related to the capture of former Venezuelan President Nicolas Maduro. In August, the CFTC fined a former White House teleprompter operator for betting on presidential speeches.
Platforms and lawmakers respond to pressure
Both major prediction market companies, Kalshi and Polymarket, say they have taken steps to tighten controls to prevent officials from using inside information. Most reported insider trading incidents were first detected and flagged to regulators by the platforms themselves. Polymarket recently hired a former law enforcement expert and rolled out surveillance software called "PolyGraph" built with analytics firm Chainalysis. While the committee credits these companies for self-policing, lawmakers are also acting. In April, the Senate voted to pass a resolution to ban members from trading on prediction markets. Existing laws like the STOCK Act already bar federal employees from trading commodity futures or options based on nonpublic information.
