House Oversight staff urge Congress to bar officials from prediction-market bets, and credit Kalshi and Polymarket for catching insiders

Staff of the House Committee on Oversight and Government Reform told the committee’s Republican majority on Friday 13 November 2026 that Congress should consider a law limiting, or banning outright, prediction-market trading by federal employees, Members of Congress and their staff, whether or not they hold inside information. The six-page staff memorandum, published with a committee press release, reports on a probe into insider trading on prediction markets that Chairman James Comer (R-Ky.) opened in May. It is a staff update to Majority Members. It is not a bill, carries no vote and names no sponsor.

Toward the industry, the tone is friendlier than the headline. It says most of the insider cases reported so far were first caught by the platforms themselves, then passed to regulators and law enforcement, and it thanks Polymarket and Kalshi by name for their cooperation. Its case for new rules rests on officials, not on the markets.

“Congress must consider additional reforms to prevent public corruption and restore the American people’s trust in government,” Comer said in the release.

A staff memo to the Majority, not a bill

The document is headed “MEMORANDUM”, addressed to the committee’s Majority Members and signed “Committee Staff”. It updates them on what platforms and government regulators are doing to enforce insider-trading rules. Nothing in it binds anyone.

The memo carries no bill number or draft text, and no hearing date. It makes no request to the Commodity Futures Trading Commission (CFTC), the federal regulator of these markets, and it reports no new case. It also gives no count of how many officials have bet on prediction markets. Every case it describes was already public before Friday.

So the news is the committee’s direction of travel. A Republican-led oversight panel that spent six months collecting the platforms’ internal files has come out for tighter rules on government personnel, and for keeping the companies in the job of policing their own order books.

Six months, five platforms, nearly 1,700 pages

Comer opened the inquiry on 22 May 2026 with letters to Kalshi chief executive Tarek Monsour and Polymarket chief executive Shayne Coplan. On 29 September he widened it to Hyperliquid Labs (letter to co-founder Jeff Yan), Crypto.com (Kris Marszalek) and Aristotle Exchange, the parent of PredictIt (John Aristotle Phillips).

By the memo’s count, the committee received “nearly 1,700 pages” of documents and communications, and staff sat through five bipartisan briefings with platform representatives, lawyers and the employees who look for suspicious trades. Polymarket and Kalshi also took numerous follow-up calls and sent supplemental answers, the memo says.

Four of the five platforms gave substantial documents or briefings on their controls. Hyperliquid was the exception. In a 13 October letter from its law firm, Latham & Watkins, it told the committee it did not “possess the types of records and information” requested on identity checks and know-your-customer procedures. That fits how the venue works: Hyperliquid is an onchain exchange where traders connect a wallet rather than open a verified account.

The insider trading cases behind the memo

The committee first wrote to Kalshi and Polymarket after reports of candidates trading on their own races and of contracts bought with suspicious timing around classified military operations. The memo lists the examples it relies on. Some are in court, some were settled with the CFTC, and one was never charged.

The Maduro bets and the candidates

The best known is the indictment of US Army Master Sergeant Gannon Ken Van Dyke, filed on 24 April 2026. Prosecutors allege he used classified information about Operation Absolute Resolve, the US operation that led to the capture of Venezuelan president Nicolas Maduro, to trade event contracts on Polymarket for more than $409,000 in profit. These are allegations; the memo reports the indictment, not a verdict.

Politicians come next. In May 2025 Kyle Langford, described in the memo as a candidate for governor, placed a $200 trade on Kalshi on his own race. Three more politicians did the same in 2026; the memo cites NBC News reporting of 22 April 2026 that Kalshi fined and suspended them.

The third example is the least settled. In its main text, the memo says media reports of a large leveraged short on Hyperliquid, placed “within minutes” of a presidential announcement on US tariff policy that was not yet public, “mirrored a pattern” of insider trading.

The source in its footnote tells a different story on timing. That Investing.com article of 22 October 2025, quoted in the footnote, describes a $1.1 billion short on bitcoin and ether funding payment between longs and shorts, settled every few hours, keeps the contract price close to the spot or index price.">perpetual futures that was opened 30 hours before Trump’s post and closed almost immediately afterwards, for more than $150 million in profit. So the memo puts the trade minutes from the announcement while its own cited source puts the opening a day and a half earlier, and the memo does not say which account is right. No charge, fine or finding is attached to that trade.

Three CFTC actions that began with a platform’s report

Next come three CFTC cases the memo credits to reports from the platforms. In each, according to the memo, the venue spotted the trades first. The amounts below come from the CFTC’s own press releases.

For the Google case, the memo says Coplan confirmed that Polymarket detected the activity and reported it to the CFTC. For Santos, Kalshi froze his account before reporting him; the memo also cites an NPR report of 2 June 2026 that the Justice Department was investigating him. For Perez, Kalshi detected the trades and reported them; the CFTC’s release thanks KalshiEX for its assistance. Spagnuolo’s case has not been decided. The Perez case is also behind the letter Senators Warren and Merkley sent the White House, which asks for answers by 23 November.

Insider trading law already covers prediction markets

The memo’s legal section is blunt: current federal insider-trading rules apply to prediction markets “just as” they apply to securities and derivatives. New law would be about who may trade, not about whether insider trading is illegal.

The chain it describes runs as follows. The CFTC has exclusive jurisdiction over derivatives under the Commodity Exchange Act, and event contracts fall under that Act. A prediction market that wants to serve US customers must register as a Designated Contract Market (DCM). In 2010 the Dodd-Frank Act amended the Commodity Exchange Act to ban fraud and manipulation in derivatives markets. In 2011 the CFTC adopted Rule 180.1, which it has said was “modeled on” the SEC’s Rule 10b-5, the main US securities rule against trading on material nonpublic information.

A second layer targets officials directly. Section 4c(a)(3) of the Act, as amended by the STOCK Act of 2012, bars federal agency employees, Members of Congress, congressional staff and judicial officers and employees from using nonpublic information from their jobs to trade futures, options or swaps. Section 4c(a)(4) adds a ban on tipping people outside those groups who trade on the information.

If the mechanics of an event contract are new to you, our explainer on how prediction markets work covers the yes-or-no contract, the price as a probability and the legal fights around Kalshi and Polymarket.

Polymarket’s two exchanges, and the VPN gap

One paragraph deals with a split that matters for enforcement. Polymarket runs two separate platforms. QCX LLC, doing business as Polymarket US, is a CFTC-registered DCM based in New York that serves US customers and applies know-your-customer and anti-money-laundering rules. Polymarket.com is a decentralised crypto exchange headquartered in Panama, not registered with the CFTC and not meant for US persons.

Polymarket.com tries to keep Americans out, the memo says, but VPNs and other ways of hiding a location “may have allowed some U.S. persons” to get around both its terms of service and its internal controls. The Google case shows the CFTC still went after trading on the offshore site.

PolyGraph and the platforms as first line of defence

Section II of the memo is titled, in capitals, “Prediction markets play a key role in detecting and preventing suspicious trades”. Most of it describes Polymarket’s surveillance, based on a briefing to staff on 30 September.

Polymarket hired a former law-enforcement expert to run a team working on insider-trading detection, the memo says, and built a surveillance system called PolyGraph with the blockchain analytics firm Chainalysis. PolyGraph pulls in social media, law-enforcement tips, open-source investigations, user reports, internal AI tools, blockchain analytics and watchlists. It traces fund flows, searches past trading and flags transactions for a human to review, with real-time alerts and a daily digest for the team.

Kalshi gets less space in the text, but two of the three CFTC cases in the table came from its reports. The press release goes slightly further than the memo and says both Polymarket and Kalshi have kept improving their surveillance.

What the memo asks Congress to do

The recommendations fill the last page, under the heading “Further statutory restrictions on federal government personnel are necessary”. Congress, the staff write, should consider legislation that further restricts which event-contract markets federal personnel, Members of Congress and congressional staff can use, “regardless of whether they are trading on insider information”.

At a minimum, the memo says, government personnel should be barred from contracts on government actions or political outcomes. The memo leaves two versions open: a full ban on trading on prediction markets, or a ban limited to government-related contracts. Either way, it wants the rule to cover officials in all branches of government, so that personnel “should not personally and financially benefit” from non-public information they receive at work, and so that even the appearance of it goes away.

A second, shorter recommendation asks Congress to make sure platforms and regulatory agencies share the information needed to enforce such limits, so the markets can keep detecting insider trading. The memo does not say which agency, what data or under what legal basis.

The Senate already bans itself, and the Pentagon has a memo

The staff present their proposal as an extension of steps already taken. The Senate passed a resolution in April 2026, S. Res. 708 of 30 April, changing its standing rules to bar Senators and their staff from participating in prediction markets. In October the Department of War issued a memo reminding service members of their legal duties and barring them and civilian personnel from using nonpublic information or prediction markets for personal gain (see our report on the Pentagon’s prediction-market memo).

A House rule like the Senate’s would cover only the House. A statute is what the staff have in mind for executive and judicial employees, which is why the memo speaks of “legislation” rather than a House resolution.

The Senate is pushing on the platforms too. Senators Elizabeth Warren, a Democrat, and John Curtis, a Utah Republican, asked Kalshi and Polymarket to count their insider-trading cases by election day, and the Warren and Merkley letter to the White House is pending. The memo mentions neither.

It arrives in a busy week for the sector. On 12 November Louisiana sued several platforms and won a same-day temporary restraining order, and the CFTC sued Arkansas (details in our report on the Louisiana suit and the CFTC case). The memo does not touch the federal-versus-state dispute over sports and election contracts.

What comes next for a ban on officials’ bets

For now, nothing changes for traders or for officials outside the Senate and the military. The memo is advice to one side of one committee. A ban would need a bill, committee action and votes in both chambers, then a signature, and the current Congress ends in early January.

The memo does not say who would write such a bill or when, and it asks nothing of the CFTC. The only industry position it records is the cooperation of Kalshi and Polymarket with the inquiry.

The next fixed date in this story is 23 November, the deadline Warren and Merkley gave the White House to explain how it keeps staff from betting on inside information.