Seven House Democrats sent a letter Monday to Commodity Futures Trading Commission Chair Michael Selig, asking why the agency has not acted against offshore war bets tied to U.S. military actions in Venezuela and Iran.

The letter, led by Reps. Jim McGovern and Seth Moulton, cites “high-profile instances of alleged insider trading” on platforms like Polymarket and Kalshi, and argues the CFTC already has authority under the Commodity Exchange Act to act. They want to know why it hasn’t.

Polymarket is an offshore company, but the letter points out that the Commodity Exchange Act allows the agency to regulate when "swap activities outside the United States have a direct and significant connection with activities in, or effect on, commerce of the United States."

The Trump Family Question

The letter also asks Selig whether the agency is aware of “conflicts of interest between major market participants and family members of Executive Branch officials.”

Donald Trump Jr. serves as an investor and unpaid advisor to Polymarket and a strategic advisor to Kalshi. The Trump family’s social media company has separately announced its own prediction market platform, Truth Predict.

Lawmakers have requested a response by April 15.

A Messy Week For The CFTC

The letter lands as the regulator is fighting on multiple fronts.

The CFTC last week sued Arizona, Illinois and Connecticut over cease-and-desist orders issued to prediction market platforms, a battle that follows Kalshi’s criminal charges in Arizona after the company sued the state to block enforcement.

On Monday, a federal appeals court ruled New Jersey gaming regulators cannot bar Kalshi from offering sports event contracts, a win Selig called validation of federal preemption.

The outcome may matter for Flutter Entertainment (NYSE:FLUT) and DraftKings (NASDAQ:DKNG), both of which face intensifying competition from prediction market platforms.

A CFTC crackdown on offshore war bets could signal broader regulatory pressure on the industry, or simply hand incumbents more ammunition in their fight to slow Kalshi and Polymarket’s expansion.

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