A wave of insider-trading cases, from a soldier who bet on a classified military operation to Trump’s teleprompter operator, has made prediction markets a federal enforcement target. California moved on the risk months before the scandals broke.
- Federal insider-trading cases against prediction-market bettors are piling up, and the CFTC has brought its first-ever such charges over event contracts.
- The most serious: an active-duty Army master sergeant accused of using classified intelligence about the operation that captured Nicolás Maduro to win more than $400,000 on Polymarket.
- The most surreal: Trump’s longtime teleprompter operator, under CFTC investigation for betting on the president’s own speeches and out of a job as of this week.
- The California thread: one of Kalshi’s first enforcement cases was a California gubernatorial candidate, and Newsom restricted his appointees from these markets back in March.
- House Oversight has opened an investigation, the Senate has barred its own members from trading, and Kalshi says it ran more than 200 insider-trading probes in a year.
WASHINGTON — The people getting caught are what make the story. An Army master sergeant with a security clearance. A White House aide who sees the president’s speeches before anyone else. A California candidate who bet on himself. Over the past few months, a run of insider-trading cases has turned prediction markets, the fast-growing platforms where users buy contracts on real-world outcomes, into a federal enforcement target, and it has handed California a quiet vindication: the state moved on this risk before most of the country knew it existed.
Start with the most serious case. In April, federal prosecutors in Manhattan unsealed an indictment charging Gannon Ken Van Dyke, an active-duty Army master sergeant, with using classified intelligence about the operation that captured former Venezuelan President Nicolás Maduro to trade on Polymarket. Prosecutors say he bought shares in contracts on Maduro’s removal before the operation became public and cleared more than $400,000. The Commodity Futures Trading Commission filed a parallel civil case, its first-ever insider-trading complaint over event contracts, and invoked a Dodd-Frank provision nicknamed the “Eddie Murphy Rule” that targets trading on misappropriated government information. Tellingly, Van Dyke had tried the regulated exchange Kalshi first; its compliance system flagged and blocked him, so he moved to Polymarket’s unregulated side.
A Cast of Characters
The rest of the roster is smaller in dollars and stranger in detail.
Trump’s longtime teleprompter operator, Gabriel Perez, came under CFTC investigation for trading on the president’s own speeches. Perez placed bets on Kalshi’s “Mentions” market, where users wager on which words a public figure will say, and, being often the last person to see the remarks, would reportedly pull his positions when Trump went off script. He made more than $90,000 before Kalshi froze the profits. Manhattan prosecutors declined to bring criminal charges, and by this week the White House said he no longer works in the federal government. The press secretary called the episode a disgrace.
There is more. Former congressman George Santos is under DOJ and CFTC investigation over Kalshi trades the platform says it flagged and referred. An editor for the YouTube star MrBeast, Artem Kaptur, was fined more than $20,000 and banned for two years for betting on his employer’s content. And in one of Kalshi’s very first disclosed enforcement cases, a California gubernatorial candidate, Kyle Langford, drew a five-year ban and a $2,000 fine for wagering $200 on his own race and then bragging about it online. He is now running for Congress.
Why These Markets Are Exposed
Prediction markets sell contracts on discrete outcomes, and their appeal, pricing that reflects real information, is exactly what makes them a magnet for people who hold information no one else has. Applying insider-trading law built for Wall Street to a bet on a reality-show result or a line in a speech is uncharted ground, which is part of why the Van Dyke case is drawing such close attention. The platforms also divide along a regulatory line: Kalshi is CFTC-regulated and runs surveillance, while Polymarket operated on an offshore, decentralized model that made it the fallback when Kalshi said no.
The Crackdown Is Real
The response has escalated quickly. House Oversight Chairman James Comer opened an investigation into both Kalshi and Polymarket, pressing them on how they verify users and catch suspicious trades and citing a New York Times finding that more than 80 Polymarket accounts placed trades with suspicious timing. The Senate voted unanimously this spring to bar its own members and staff from trading on the platforms. And Kalshi says it opened more than 200 insider-trading investigations in a year, now requires some users to disclose their employer, and refers cases to regulators.
California Saw It Coming
This is where the state enters the story. Months before the national cases broke, Newsom moved to restrict his own appointees from using nonpublic information to trade on Kalshi and Polymarket, an unusually early guardrail. One of Kalshi’s first enforcement actions, the Langford case, was Californian. And in Washington, California Sen. Adam Schiff has co-sponsored a bipartisan bill to reclassify sports and casino event contracts as gambling, outside the CFTC’s reach altogether. With California races trading on these markets heading into the 2026 midterms, the Brennan Center has warned the contracts could fuel election misinformation, the very worry that prompted the state to act.
What to Watch
The open questions are whether existing law stretches to cover these bets, how many pending investigations turn into charges or settlements, and whether the platforms’ own surveillance can outrun the incentives. For a market whose selling point is that it knows what is coming, the prediction markets story now carries an asterisk: some of the people betting knew too, because they helped make it happen. It is a live cautionary tale for anyone following gambling in California, where the guardrails went up first and the reckoning has gone national.