House Oversight Committee staff have recommended that Congress restrict federal officials from trading on prediction markets, particularly on government actions and political outcomes. The November 13 memo proposes either an outright ban or targeted limits on such trades, while leaving the prediction market platforms' core business operations intact.
The committee opened its investigation in May and expanded it to five platforms by September. Staff recommendations include two main steps: restricting officials across all branches from prediction markets through either a ban or limits on government and political contracts, and requiring platforms and regulators to share enforcement data.
These restrictions would apply regardless of whether officials possess inside information. The Senate already barred senators and their staff from prediction markets in April, and the Department of War has prohibited personnel from using prediction markets for personal financial gain.
Enforcement Cases Drive Regulatory Push
The memo cites three CFTC enforcement actions that highlight insider trading concerns:
- Former Congressman George Santos was ordered to pay $35,000 for manipulative trading on a Kalshi contract
- White House teleprompter operator Gabriel Perez was ordered to pay $172,000 over Kalshi mention contracts
- The CFTC alleges Google engineer Michele Spagnuolo made $1.2 million using nonpublic search data on Polymarket.com
The memo notes that Kalshi detected and reported the Santos and Perez trades, while Polymarket flagged the Google case. Platform self-reporting has enabled most known insider trading enforcement actions by the CFTC.
Market Growth and Industry Scale
Robinhood, which operates a prediction market platform but was not part of the oversight probe, provides the clearest public measure of industry growth. The brokerage reported that in Q3 2026, event contracts revenue rose more than sixfold year over year to $173 million, while customers traded a record 16.4 billion event contracts, more than 7 times the prior-year figure. By comparison, Robinhood's crypto revenue declined 55% year over year to $120 million.
Kalshi and Polymarket remain private companies, making their financials unavailable for public review.
Ongoing Regulatory Challenges
Multiple regulatory fronts could affect the prediction market industry. Senator Elizabeth Warren, known for her skepticism of crypto, is expected to chair the Senate Banking Committee beginning in January. The CFTC has reportedly warned Kalshi about possible charges related to new contract notices. Additionally, Connecticut issued cease-and-desist orders in September to nine companies, including Robinhood and Polymarket, over sports contracts.
