FOIA docs: the CFTC launched at least three previously unreported investigations into Polymarket trading, including about Google's 2025 Year in Search Ranking

Trading on prediction markets is now subject to insider trading investigations and criminal charges.

The Commodity Futures Trading Commission (CFTC) has initiated at least three previously undisclosed investigations into Polymarket, a prediction market platform. These investigations focus on allegations of insider trading. One probe concerns event contracts related to pardons issued by former President Joseph Biden, prompted by a report of a trader profiting over $300,000. Another investigation targets "Iran event contracts," following a report of suspicious accounts making $2.4 million with a high win rate. A third investigation is underway regarding Google-themed contracts, specifically "Google's 2025 Year in Search Ranking," with a focus on individuals allegedly engaging in insider trading. The Southern District of New York is conducting a parallel criminal investigation into the Google contracts. Two arrests have already been made in connection with Polymarket insider trading investigations, leading to both civil CFTC charges and criminal charges from the DOJ.

The CFTC's proactive investigations, reportedly triggered by media reports, suggest a heightened scrutiny of prediction markets. This regulatory approach may signal a shift towards treating these platforms as regulated exchanges rather than mere betting pools, potentially impacting their operational freedom and market integrity. The involvement of the Southern District of New York in parallel criminal investigations further underscores the seriousness with which these activities are being viewed by federal authorities.

These enforcement actions affect both users and operators of prediction markets by introducing significant legal risks. The arrests and charges indicate that regulators are increasingly willing to pursue individuals for insider trading on these platforms, potentially leading to substantial financial penalties and criminal convictions. Companies like Polymarket may face increased compliance burdens and stricter oversight to prevent market manipulation and insider trading.