A group of federal representatives asking for an inquiry into prediction markets Tuesday, while the Commodity Futures Trading Commission (CFTC) once again threw its weight behind the operators in state court.
Rep. Chris Pappas (D-NH) penned a letter calling on House Oversight Chair James Comer to “open an investigation into corruption and insider trading occurring in online prediction markets.” Pappas wants the Oversight Commitee to use its subpoena power to require prediction market operators to produce internal records related to recent controversies related to insider information.
“The American public has a legitimate interest in knowing whether individuals entrusted with classified national security information have used that access for personal financial gain,” the letter reads in part. “A committee investigation, enforced with subpoenas, will include internal records, which are the only means by which the individuals who conducted these trades can be identified and the question of whether these platforms are upholding their responsibilities can be answered.”
Six other Democratic members of Congress co-signed the letter to Comer, including multiple former military members:
- Rep. Maggie Goodlander (D-NH)
- Rep. Sara Jacobs (D-CA)
- Rep. Seth Magaziner (D-RI)
- Rep. Seth Moulton (D-MA)
- Rep. Dina Titus (D-NV)
- Rep. Rashida Tlaib (D-MN)
Prediction market trades on Iran, Venezuela in focus
Pappas points in particular to trades related to the ongoing war in Iran. He also references last month’s indictment of U.S. Army soldier Gannon Ken Van Dyke for pocketing more than $400,000 in profits from Polymarket trades on the capture of Venezuelan President Nicolas Maduro, about which Van Dyke possessed classified information.
“We are deeply concerned that individuals with access to sensitive government information have used that access for personal financial gain,” Pappas wrote.
Pappas, who also supports pending legislation banning members of Congress from trading on prediction markets, also referred to numerous suspect trades related to U.S. and Israeli operations in Iran:
- “A single trader made nearly $1 million with a 93 percent success rate on wagers predicting unannounced U.S. and Israeli military operations against Iran, placing bets hours before strikes in October 2024, June 2025, and February 2026.”
- “A separate group of 38 accounts netted more than $2 million on the February 28 strikes alone, after being preloaded with funds the preceding week.”
- “At least 50 newly created accounts placed coordinated bets on a U.S.-Iran ceasefire on April 7, some opened minutes before the announcement.”
- “Israeli authorities have separately indicted two individuals, including a military reservist, for placing Iran-related bets on Polymarket using classified information.”
The letter requests a response from Comer by May 22.
CFTC again backs Kalshi, this time in Ohio
Meanwhile, the CFTC on Tuesday again stepped into the fray on behalf of Kalshi in a legal battle against a state-level gaming regulator. This time, the federal regulator filed an amicus brief in a case tied to ongoing battles between Kalshi and Ohio.
The brief relates to a case in the Sixth Circuit Court of Appeals where Kalshi was denied a preliminary injunction in March barring Ohio from enforcing state gaming laws against the prediction markets operator.
As it did in other states, the CFTC asserted that it maintains exclusive jurisdiction over the regulation of prediction markets.
“The federal district court in Ohio took an improperly narrow view of the Commission’s jurisdiction, and we are asking the Court of Appeals to correct that error,” said CFTC Chairman Michael Selig. “As I’ve said repeatedly, the CFTC will not allow overzealous state governments to undermine the agency’s longstanding authority over these markets.”
Last month, the federal regulator scored a win in Arizona, preventing the state from taking criminal action against Kalshi.
The CFTC also previously filed suit in support of prediction market operators in a series of states including:
