US federal authorities are expanding insider-trading investigations across prediction markets. Prosecutors in Manhattan and Washington, working with the Commodity Futures Trading Commission, are pursuing new cases involving Polymarket and Kalshi.
Charges could come this autumn, according to The Wall Street Journal. One investigation targets a service member who made over $1 million on contracts tied to military strikes on Iran and Venezuela. Military-event contracts are unavailable on CFTC-registered platforms but offered through Polymarket's international version, formally closed to US users.
A second case involves a KPMG employee. Authorities are examining whether he used internal access to non-public data to bet on a public company's quarterly results, specifically whether it would beat consensus analyst forecasts.
These are not the first prosecutions. In April, charges were filed against service member Gannon Ken Van Dyke, who allegedly earned over $400,000 on contracts tied to Nicolás Maduro's resignation using classified information. Another case involves Google engineer Michele Spagnuolo, accused of making around $1.2 million on contracts based on 2025's most popular search queries. Both defendants have pleaded not guilty and contest the legal classification of the contracts as swaps under the Commodity Exchange Act.
Kalshi and Polymarket have handed over data on dozens of traders this year, though few criminal cases have materialised. Similar arrests have taken place in Israel, where military personnel face charges for trading on Polymarket using classified information about combat operations.
