Lawmakers in Congress are urging a federal examination of trades conducted on Polymarket, particularly following a series of strategic bets made just prior to significant geopolitical announcements related to the Iran conflict.
Representative Ritchie Torres, who serves on the House Financial Services Committee and its digital assets panel, sent a letter to the Commodity Futures Trading Commission (CFTC) on Thursday, asking for an investigation into the timing of these recent trades. The CFTC regulates derivatives markets, which include prediction platforms.
Torres expressed concerns in his letter, stating, “This pattern raises serious concerns that certain market participants may have had access to material nonpublic information regarding a market-moving geopolitical event.”
In a conversation with The Associated Press, he elaborated, “What is the statistical likelihood of anyone other than an insider trader placing a winning bet 12 minutes before a market-moving presidential announcement? There are two answers: God or an insider trader. And something tells me that God is not placing bets around Donald Trump’s posts on Truth Social.”
Senator Richard Blumenthal also reached out to Polymarket, requesting details on trades related to war and violence, along with measures to prevent insider trading.
“Polymarket has become an illicit market to sell and exploit national security secrets unlike any in history, and by extension, a potential honeypot for foreign intelligence services watching for those same suspicious bets and wagers,” Blumenthal noted in his letter.
At least 50 newly created accounts placed substantial bets on a US-Iran ceasefire shortly before President Donald Trump announced the development on social media late Tuesday. Notably, these accounts did not engage in any other trades on the platform.
Other incidents have also raised eyebrows. In January, an anonymous user made $400,000 by betting that Nicolas Maduro would be ousted just hours before his capture. Prior to the Iran conflict, another account reported approximately $550,000 in profits from trades based on expectations that the US would strike Iran and that Ali Khamenei would be removed.
A study from Harvard University estimated that around $143 million in profits on Polymarket could be linked to individuals with access to nonpublic information. This research utilized public blockchain data and examined events ranging from Taylor Swift’s engagement to the Nobel Peace Prize.
Concerns regarding prediction markets have transcended party lines, with Republican lawmakers voicing objections to event-based betting linked to geopolitical outcomes and advocating for restrictions.
“We don’t want to imagine a world where America’s adversaries use prediction markets to anticipate our next move,” stated Representative Blake Moore.
Currently, there are at least two bipartisan bills under consideration, one in the House and another in the Senate.
Prediction platforms like Kalshi and Polymarket allow users to trade on various outcomes, from weather conditions to interest rate decisions.
Polymarket has limited availability in the US following a ban in 2022. The company is working on re-entering the market through the acquisition of a CFTC-licensed exchange and clearinghouse, which would enable it to offer contracts domestically. A limited rollout has already commenced.
Additionally, the company operates a crypto-based platform offshore, which remains outside US jurisdiction and accounts for the majority of its activity.
These developments occur as prediction market operators seek to expand their presence in the US, particularly in the sports segment.
Kalshi, which operates under US regulations, has outlined ambitions to become a leading prediction market. The company has launched contracts tied to sports outcomes, drawing parallels to traditional wagering.
Both firms have announced partnerships with sports organizations and media entities to broaden their reach. The competitive landscape also features political connections, with Donald Trump Jr. investing in Polymarket through 1789 Capital and serving as a paid strategic adviser to Kalshi.