The House Oversight Committee has recommended that Congress consider restricting, or potentially banning, prediction-market trading by federal officials. Its November 13 staff memorandum follows an inquiry that collected nearly 1,700 pages of documents and five bipartisan briefings from platforms.
The inquiry covered Kalshi, Polymarket, Hyperliquid, Crypto.com and PredictIt. Committee staff said current insider-trading prohibitions already apply when covered officials use nonpublic government information to trade commodity futures, options or swaps. The proposed reform would go further by limiting some trades regardless of whether prosecutors could prove misuse of confidential information.
The committee identified two possible approaches: a broad prohibition on government personnel using prediction markets, or narrower restrictions on government-related contracts. It also called for better information sharing among platforms and regulators so suspicious activity can be investigated across venues.
The committee release credited platforms with improving surveillance. It said Polymarket had implemented a system called PolyGraph with Chainalysis and that most incidents reviewed by the inquiry were initially detected and reported by market operators.
No bill accompanied the memorandum, so the recommendations are not law. They nevertheless provide a documented basis for legislation and shift the policy question from whether insider trading is possible to which officials and contracts should be off limits before a suspicious trade occurs.
TOKEN RECON ASSESSMENT
Prediction markets are entering the same ethics debate that reshaped congressional stock-trading rules, but event contracts create a sharper information problem. Government personnel can influence or learn about the very outcome being traded. The memo’s force will be measured by statutory text, committee action and enforcement resources. Until a bill is introduced, this is a policy blueprint rather than a new trading restriction.
