Federal prosecutors are reportedly preparing two new prediction-market cases that could broaden their emerging insider-trading strategy, targeting alleged use of military intelligence and confidential corporate earnings data even as courts have yet to settle whether existing commodities law clearly covers such wagers.
A US servicemember is under investigation after allegedly earning more than $1 million through Polymarket bets tied to US military operations in Iran and Venezuela, according to The Wall Street Journal, citing people familiar with the matter.
Federal prosecutors in Manhattan and Washington, along with the CFTC, have been involved in the investigation, the Journal reported. Charges could come this fall, although final decisions have not been made.
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The servicemember has not been publicly identified.
A separate investigation involves an employee of KPMG who allegedly placed a prediction-market wager on whether an unidentified public company would beat analysts’ earnings expectations. Authorities are examining whether the employee accessed material nonpublic information through their job and used it to trade, according to the Journal.
Neither the KPMG employee, the company involved, nor the prediction-market platform has been identified.
If charges are filed, the cases would expand an enforcement theory already being tested in court.
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In April, prosecutors charged Army servicemember Gannon Ken Van Dyke, alleging he used classified information about a US military operation involving Nicolás Maduro to trade on Polymarket. The CFTC said Van Dyke generated more than $404,000 in profits. He has pleaded not guilty.
A month later, Google engineer Michele Spagnuolo was charged after authorities alleged he used confidential information about Google’s 2025 Year in Search results to make approximately $1.2 million through Polymarket trades.
Spagnuolo is seeking dismissal, arguing that the contracts were wagers rather than swaps governed by the Commodity Exchange Act. Van Dyke has also challenged aspects of the government’s commodities-law theory.
That means prosecutors are reportedly preparing additional cases before courts have fully resolved whether prediction-market contracts fall within the framework being used to pursue alleged insider trading.
Congress has also entered the issue. The House Oversight Committee opened an investigation in May into potential insider trading on Polymarket and Kalshi.
Polymarket prohibits trading on confidential information obtained through a duty of trust and says its monitoring program has generated nearly 100 suspicious-wallet referrals to law enforcement.
