New Hampshire Dem Calls for Federal Probe of Prediction Market Trading

• Pappas wants Oversight Chair Comer to look into insider trading on prediction markets
• Calls for subpoenaing of operators’ internal records
• Says numerous “suspicious” trades have been placed involving the war in Iran

A New Hampshire Democrat is calling on the House Oversight Committee to examine insider trading on prediction markets, requesting that the committee subpoena internal documents from operators.

In a letter to House Oversight Chairman James Comer (R-KY), Rep. Chris Pappas (R-NH) says “there have been a number of suspicious trades made in connection with U.S. and Israeli military operations against Iran”, noting one trader cleared $1 million with a win rate of 93% on event contracts involving the conflict in Iran.

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,” notes Pappas.

Some critics, including US politicians, assert Polymarket, which isn’t operational in this country, is a hotbed of nefarious trades on the Iran conflict.

Polymarket Attempting to Bolster Insider Trading Protocols

Polymarket has been the subject of insider trading scrutiny, including by Pappas who asserts the prediction market operator hasn’t implemented meaningful guardrails to prevent trading on nonpublic information.

The congressman, who’s a 2026 US Senate candidate, says Polymarket’s lack of action “raises serious questions about its broader compliance with federal law.”

“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,” wrote Pappas in a letter to Comer.

“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.”

Citing national security concerns and the specter of corruption on prediction markets, Pappas asked Comer to respond to his letter by May 22.

Pappas Says Congress Has Authority to Investigate Prediction Markets

While there’s doubt regarding the industry’s ability to damp insider trading, Pappas believes Congress can flex its muscle to expose potential illegal activity on prediction markets.

“Congress has both the authority and the responsibility to determine whether existing ethics, classification, and financial disclosure laws have been violated, and whether legislative action is necessary to prevent recurrence,” he wrote to Comer. “We cannot fulfill that responsibility without knowing who placed these trades.”

He may be on to something because the Commodities Futures Trading Commission (CFTC), the federal regulator of prediction markets, is funded by way of the congressional appropriations process.