House Oversight Committee outlines tighter prediction market trading curbs for federal personnel

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Highlights

House Oversight Committee recommends new statutory restrictions for federal personnel on prediction markets, including possible trading bans or limits on government-related contracts.
The panel finds current insider trading laws, such as the Commodity Exchange Act and STOCK Act, already apply to prediction market activity by covered officials.
Polymarket and Kalshi are enhancing surveillance programs, with Polymarket deploying PolyGraph and hiring a law enforcement expert to oversee insider trading prevention.

Committee findings and recommended restrictions

As reported by House Oversight Committee, citing the House Committee on Oversight and Accountability, the panel has released a staff memorandum on its investigation into insider trading risks in prediction markets, after reviewing nearly 1,700 pages of documents and communications and receiving five bipartisan staff briefings from platforms. The committee says the inquiry focuses on government officials, military personnel and individuals with security clearances who may be using non-public information to trade for personal gain.

Chairman James Comer says Congress has a duty to ensure laws adequately prevent insider trading, hold bad actors accountable and stop government officials and employees from profiting from nonpublic information. The memorandum says current federal insider trading laws and regulations already apply to prediction market contracts, citing provisions in the Commodity Exchange Act and the STOCK Act that bar covered federal personnel from trading on nonpublic information or passing it to others who assist in such trades.

The committee also recommends further statutory limits on federal personnel, including either an outright prohibition on trading on prediction markets or narrower restrictions on government-related contracts. It says extending such limits across all branches of government would strengthen ethical standards and reduce the appearance that officials are benefiting financially from information obtained through public service.

Platform surveillance and broader market implications

The memorandum says prediction market operators play a central role in identifying and reporting suspicious trades, with most reported insider trading incidents on these platforms initially detected by the markets themselves and then referred to regulators and law enforcement. Four of the five platforms that briefed the committee provided documentation or descriptions of internal controls and proprietary monitoring systems designed to flag unusual trading patterns.

Polymarket and Kalshi are singled out for continued upgrades to their surveillance programs. According to the memorandum, Polymarket recently hired a former law enforcement expert to oversee insider trading prevention and detection efforts and deployed a surveillance tool called PolyGraph in partnership with analytics company Chainalysis.

The committee says Congress should also consider broader reforms to prevent public corruption and rebuild trust in government, including legislation that further limits which event contract markets federal personnel, members of Congress and congressional staff may access, regardless of whether insider information is involved. It also calls for stronger information-sharing between prediction market platforms and regulatory agencies to support enforcement and market integrity.

We recently wrote about FDA approval contracts in U.S. prediction markets and senators pressing HHS for safeguards against insider-trading risks.

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