House Oversight Floats Ban on Federal Officials Trading Prediction Markets

A staff memorandum from the House Oversight Committee, released Friday, recommends that Congress consider new restrictions on federal personnel trading prediction markets — ranging from an outright ban to narrower limits on contracts tied to government decisions. Chairman James Comer ordered the investigation into insider trading by government officials, military personnel and security-clearance holders who wagered on platforms like Kalshi and Polymarket using nonpublic information.

The probe gathered nearly 1,700 pages of documents and included five bipartisan staff briefings from prediction-market platforms on how they detect and report suspicious activity. The scale of the record signals sustained congressional attention to a sector the CFTC is simultaneously trying to regulate.

What did Chairman Comer say?

Comer framed the problem as one of public trust. "Americans are rightly concerned about public corruption," he said, arguing Congress "has a duty to ensure our laws adequately prevent insider trading" and prohibit officials "from profiting from nonpublic information." He added that lawmakers must weigh "additional reforms to prevent public corruption and restore the American people's trust in government."

What restrictions does the memo propose?

The memorandum's central recommendation asks Congress to weigh new limits on federal personnel across two tiers:

• An outright ban on trading prediction markets.
• Narrower limits on specific contracts, such as those tied to government decisions.

Applying such rules across all branches of government, the committee argued, would reinforce that federal employees should not financially benefit from access to nonpublic information — and would remove even the appearance of doing so.

The memo stressed that existing law already reaches these markets. It cited the Commodity Exchange Act, as amended by the STOCK Act, which bars federal employees, members of Congress and others from trading commodity futures, options or swaps on nonpublic information drawn from their positions. For CFTC-regulated exchanges like Kalshi, that legal bridge is direct; for offshore venues, enforcement depends on cross-border reach.

How did the platforms respond?

The committee credited the platforms themselves for policing their markets, noting that most reported insider-trading incidents were first detected and flagged to regulators by the exchanges rather than by government surveillance. It singled out Polymarket, which hired a former law enforcement expert and deployed surveillance software called "PolyGraph" built with analytics firm Chainalysis, and Kalshi for strengthening its detection protocols.

Why now?

The scrutiny follows a string of enforcement cases. In April, U.S. authorities charged a soldier over alleged Polymarket trades tied to a military operation that resulted in the capture of Venezuelan President Nicolás Maduro. In August, the CFTC fined a former White House teleprompter operator for betting on presidential speeches.

The memo also lands amid broader pressure on the sector. The CFTC is moving to assert authority over prediction markets in litigation against several states, while Sen. Elizabeth Warren — an incoming Senate Banking Committee chair, per the report — has made the industry a target.

Any legislative response would likely move through the House Financial Services and Agriculture Committees alongside reauthorization of the CFTC, giving lawmakers a concrete vehicle, and deadline, for the restrictions the memo proposes.