House Oversight Committee Calls for Tighter Restrictions on Prediction Market Trading

The House Committee on Oversight and Government Reform released a staff memorandum on Nov. 13, 2026, detailing an investigation into insider trading by government officials, military personnel, and individuals holding security clearances on prediction market platforms ¹. According to the committee, covered individuals have placed trades using non-public information for personal profit ¹. The findings stem from five bipartisan staff briefings and nearly 1,700 pages of records gathered from prediction market operators ¹.

Committee Chairman James Comer stated that Congress must examine new legislative reforms to prevent public corruption and protect public trust ¹. Under existing frameworks—including the Stop Trading on Congressional Knowledge (STOCK) Act amendments to the Commodity Exchange Act—federal agency personnel, members of Congress, congressional aides, and judicial employees are prohibited from using non-public official details to trade commodity derivatives, or tipping third parties to execute trades ¹. The memorandum clarified that federal insider trading prohibitions currently govern event contracts traded on prediction markets just as they apply to traditional derivatives ¹. For wider context on existing federal frameworks, see Basis Desk's coverage on how prediction markets are regulated in the US.

Platform Surveillance and Recommended Reforms

The committee noted that prediction market platforms have played a primary role in identifying illicit conduct, with most documented cases initially spotted and escalated to regulators by the operators themselves ¹. Four of five reviewed venues briefed staff on proprietary controls, including automated pattern-detection tools ¹. Notably, Polymarket developed an internal surveillance protocol titled "PolyGraph" alongside blockchain analytics company Chainalysis and appointed a former law enforcement official to run its insider trading detection team, while Kalshi also introduced iterative surveillance improvements ¹.

To counter persistent compliance risks, the committee recommended that Congress enact statutory prohibitions on federal personnel trading on prediction markets, either across all event contracts or specifically on government-related markets, regardless of direct access to non-public material ¹. The report also urged formal information-sharing mechanisms between event market platforms and regulatory bodies to streamline enforcement ¹.