Kalshi and Polymarket face U.S. congressional scrutiny

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Kalshi and Polymarket face scrutiny

Highlights

Congress is demanding documents from Polymarket and Kalshi on KYC procedures, geoblocking and suspicious trades.
Responses are due by June 5, 2026.
The investigation focuses on bets placed before military operations, political contracts and access to nonpublic information.

What Congress is demanding

Committee Chairman James Comer sent letters to Polymarket CEO Shayne Coplan and Kalshi CEO Tarek Mansour. Lawmakers requested documents explaining how the platforms verify the identities of U.S. and foreign users, enforce geographic restrictions and detect suspicious trading activity.

The companies must provide information covering the period from January 1, 2024, to the present by June 5, 2026. The request covers KYC procedures, algorithms for identifying abnormal activity, internal investigations, notifications to the Justice Department, the CFTC and other regulators, as well as contracts linked to military operations by the United States and its allies.

The committee separately noted that internal platform records may be the only way to determine who was behind suspicious trades and whether the companies complied with their legal obligations. The letters also refer to the risk that U.S. rules could be bypassed through offshore venues and international access.

Why prediction markets are under scrutiny

Several episodes prompted the investigation. The committee referred to a New York Times investigation, according to which more than 80 Polymarket users placed bets showing suspicious patterns, including shortly before unannounced U.S. and Israeli operations against Iran.

The letter to Kalshi also mentions gubernatorial candidate Kyle Langford, who in May 2025 placed a $200 bet on his own race, as well as three other politicians who placed bets on campaigns linked to themselves. Separately, the committee pointed to a federal indictment against U.S. Army Sgt. Gannon Ken Van Dyke, who is accused of using classified information about Operation Absolute Resolve to place bets on Polymarket that generated more than $409,000 in profit.

Kalshi has been a designated contract market under CFTC oversight since November 2020, but the committee drew attention to its international expansion into more than 140 countries in October 2025. In lawmakers’ view, the global scale of such platforms raises a key question: whether foreign users are subject to the same identity checks and insider trading restrictions as U.S. users.

A regulatory test for a fast-growing industry

The investigation shows that prediction markets are becoming part of broader financial and political oversight. These platforms operate at the intersection of derivatives, gambling, crypto infrastructure and political regulation, making their legal status especially complex.

For the industry, the key risk is no longer limited to individual suspicious trades but extends to trust in the model itself. If Congress concludes that existing safeguards are insufficient, the next step could be restrictions on government employees, politicians and people with access to nonpublic information.

We also reported Polymarket confirms user funds are safe after a $600,000 exploit.

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