Federal Authorities Prepare New Batch of Prediction Market Insider Trading Cases
The reported cases would broaden a federal crackdown that has so far produced just two criminal Polymarket prosecutions.
Federal authorities are expanding their scrutiny of prediction-market trading, with new investigations spanning military-event contracts and corporate earnings bets.
According to The Wall Street Journal, federal prosecutors in Manhattan and Washington, along with the Commodity Futures Trading Commission (CFTC), have been involved in the investigations. Charges in two newly revealed cases could be filed this fall. However, authorities have not yet made final charging decisions, according to the Journal.
The investigations follow two Polymarket criminal cases brought earlier this year, in which defendants are challenging the application of federal antifraud laws to prediction market trading.
New Cases Span Military Operations and Corporate Earnings
One of the new investigations involves a U.S. servicemember suspected of profiting over $1 million on Polymarket on contracts tied to military strikes in Iran and Venezuela.
The servicemember has reportedly been under scrutiny since the spring. Authorities have also investigated other members of the armed forces who traded contracts tied to military operations. Contracts tied to military operations are unavailable on CFTC-registered platforms, but offered on Polymarket’s international platform, which is supposed to be unavailable in the U.S.
A separate investigation centers on an employee at KPMG, the global accounting and consulting firm.
Authorities are examining whether the employee, who may have had access to material nonpublic information through their work, traded on whether a specific public company would beat analysts’ consensus estimates for quarterly earnings. The Journal did not identify the prediction market platform involved.
It remains unclear how many additional traders the Justice Department and the CFTC are investigating or considering charging.
The potential new cases come amid much broader scrutiny of suspicious prediction market trading. Kalshi and Polymarket have collectively referred dozens of traders to authorities this year, although relatively few cases have resulted in federal enforcement actions.
One separate investigation has involved former White House teleprompter operator Gabriel Perez. Perez allegedly used advance knowledge of President Donald Trump’s speeches to earn more than $100,000 trading Kalshi contracts. Federal prosecutors reportedly declined to pursue criminal charges, while the CFTC has discussed a potential civil settlement. Authorities have not announced any enforcement action in the case.
Similar concerns have also surfaced outside the U.S. In Israel, authorities have arrested or charged several military personnel over alleged Polymarket trading involving sensitive or classified information about military operations.
Earlier Polymarket Cases Already Face Legal Challenges
The potential new cases would follow two other high-profile Polymarket insider trading criminal prosecutions.
In April, prosecutors charged U.S. Army soldier Gannon Ken Van Dyke with allegedly using classified information to earn more than $400,000 from Polymarket contracts tied to the removal of Venezuelan President Nicolás Maduro from office.
Van Dyke has pleaded not guilty and is seeking dismissal of the case. He challenged the government’s argument that the Polymarket contracts are swaps under the Commodity Exchange Act.
In the other case, federal prosecutors charged Google software engineer Michele Spagnuolo. Prosecutors alleged that Spagnuolo used confidential information to earn approximately $1.2 million trading Polymarket contracts tied to Google’s most-searched people of 2025.
Spagnuolo has pleaded not guilty and is similarly challenging the government’s legal theory. His case is moving toward trial.
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