Prediction-Market Insider Trading: Why Identity and Surveillance Are Becoming Core Infrastructure

Prediction markets have spent most of 2026 fighting over a basic legal classification:　　Are they derivatives or gambling？　　A new congressional inquiry highlights another question that may matter just as much:　　Can these markets detect trading based on nonpublic information？　　On September 29, House Oversight Committee Chair James Comer expanded an investigation into trading controls at platforms including Hyperliquid Labs, Crypto.com and Aristotle Exchange, the owner of PredictIt.　　The requests seek records around customer identity verification, employee trades, suspicious trading, referrals to regulators and controls around material nonpublic information.　　The inquiry follows earlier requests involving Kalshi and Polymarket.　　The committee has not established that the platforms committed wrongdoing.　　The significance is structural.　　As event markets become larger and more financialized, they increasingly need the same market-integrity infrastructure expected from securities and derivatives venues.Public Events Can Still Have Private Information　　Prediction markets are often described as markets on public events.　　That can create the impression that insider trading is irrelevant.　　It is not.　　Many events are public only at resolution.　　Before that point, information can be highly asymmetric.　　Examples include government policy announcements, regulatory decisions, corporate earnings, product launches, personnel changes and geopolitical decisions.　　A government employee may know an announcement before publication.　　A company employee may know earnings before release.　　A platform employee may know a token listing