Every day, thousands of people log on to Polymarket, the popular prediction market, to bet on the outcomes of real-world events—whether a politician will resign, whether a ceasefire will hold, whether a celebrity will run for office. It feels like a game, or perhaps a more honest version of cable news commentary, except that real money changes hands with every trade. And where money changes hands, there is always the temptation to use an unfair advantage. That is the uncomfortable question at the heart of newly obtained government records: when a trader seems to know too much, are they simply lucky, or are they cashing in on secret information? Documents acquired by WIRED through a Freedom of Information Act request reveal that the US government has launched at least three previously unreported investigations into trading on Polymarket, signaling that federal regulators are taking the integrity of these markets far more seriously than many people may have realized. The records, drawn from voting tallies at the Commodity Futures Trading Commission, show the agency quietly deciding whether to open probes into suspicious trades tied to presidential pardons, international crises, and even Google’s annual search trends. In early May, CFTC chairman Michael Selig approved an order that allowed the agency’s enforcement division to open a private investigation into potential insider trading on Polymarket event contracts related to pardons issued by former president Joseph Biden. The order was a formal exercise of the agency’s legal power, granting investigators permission to take testimony, issue subpoenas, administer oaths, and demand the production of documents. It is the kind of bureaucratic step that usually happens far from public view, but it carries enormous weight for anyone whose trades might be scrutinized. The language of the order was broad, but the timing was telling: it came only weeks after a news report surfaced about a suspicious Polymarket trader who had netted more than $300,000 betting on pardon-related markets during the final days of the Biden administration. That trader correctly wagered that Biden would issue preemptive pardons to a number of prominent critics of President Donald Trump, including former United States representatives Liz Cheney and Adam Kinzinger, and Senator Adam Schiff. The documents did not say exactly which trades were under suspicion, but the connection was hard to ignore. The investigation order did not amount to an accusation, but it did raise a difficult question: if someone with inside knowledge of presidential deliberations could profit from those secrets in a prediction market, was that a crime, a regulatory violation, or simply an ugly feature of a new financial frontier? The answer is still unclear, but the CFTC’s decision to open a formal investigation showed that regulators were asking it too.
The first investigation focused on Biden pardon trades, but it was only the beginning. At the end of May, Chairman Selig approved another investigation order, this time directed at “Iran event contracts” on Polymarket. Once again, the order itself contained few specifics. There was no mention of names, accounts, or the exact trades that had raised suspicion. But the timing again pointed toward a recent piece of journalism. Just two weeks earlier, 60 Minutes had aired a report about a network of suspicious Polymarket accounts that had made $2.4 million on Iran-related trades while maintaining a nearly impossible 98 percent win rate. That kind of statistical success is not necessarily proof of wrongdoing, but it is the sort of red flag that makes financial investigators sit up and take notice. In markets, as in poker, a player who wins almost every hand is either extraordinarily good, extraordinarily lucky, or extraordinarily well-informed. When the subject matter involves geopolitics and government decision-making, the possibility of insider information becomes especially serious. The CFTC’s decision to open an investigation was, in many ways, a direct response to the public reporting. But that fact alone troubled Joseph Konizeski, a former chief trial attorney in the agency’s enforcement division. If the investigations were being prompted solely by press reports of potential violations of the Commodities Exchange Act, Konizeski told WIRED, that was a significant sign of weakness in the regulatory scheme. His point was subtle but important: a financial regulator should not need a news article to discover that someone has been winning millions of dollars on trades that look, from the outside, almost too good to be true. The CFTC should be monitoring these markets aggressively on its own. Yet the agency has come under criticism in the second Trump era for being too friendly to the prediction market industry, and the pattern of investigation triggered by investigative reporting does little to dispel that impression. The fact that the CFTC was willing to open probes at all suggests that it recognizes the need to police these markets. But the fact that it often seems to be reacting to journalists rather than leading the charge suggests that the regulatory infrastructure around prediction markets is still very much a work in progress.
The third investigation, approved in July, expanded the scope even further. This time, the target was suspected insider trading on Google-themed Polymarket event contracts. The documents obtained by WIRED included an email exchange involving Paul Hayeck, the acting director of the CFTC’s department of enforcement, in which he explained that the investigation would focus on “additional individuals who may have engaged in insider trading related to Google’s 2025 Year in Search Ranking.” That phrase, “additional individuals,” was a direct reference to an existing case involving Michele Spagnuolo, a Google engineer accused of trading on confidential information about the company’s most-searched rankings. Hayeck also noted that the Southern District of New York was conducting a parallel investigation, a sign that federal prosecutors were looking into the matter as well. He made clear that the CFTC’s investigation would be separate from the case against Spagnuolo, meaning that the agency was interested in other people who might have been involved. The details are striking because they show how prediction markets have become entangled with corporate secrecy. In the past, insider trading was mostly associated with stocks, bonds, and mergers. Now, a Google engineer’s knowledge of internal search data could be used to profit in a betting market that trades on the outcomes of consumer trends. That is a new world, and it presents new challenges for enforcement. A traditional insider trading case requires showing that someone traded on material, nonpublic information in breach of a duty. But applying that framework to a prediction market for Google search rankings is no simple task. Who exactly owes a duty to the users of Polymarket? Is a Google employee with access to internal data committing insider trading when they bet on a contract that asks whether “brat” or “Ryan Reynolds” will be the top search of the year? The CFTC is apparently trying to find out. WIRED reached out to the Southern District of New York, which declined to comment; Google also declined to comment, instead pointing to a statement it released in June noting that Spagnuolo was no longer with the company. The CFTC did not respond to requests for comment or answer questions about the status of the investigations. In the vacuum of official silence, the public is left to wonder whether the regulator’s quiet moves will lead to charges, settlements, or a dead end.
The focus on individual traders is only part of the story, because the CFTC is also reportedly investigating Polymarket itself. The company, which had its flagship platform banned from the United States in 2022, was permitted to launch a US-regulated version with a narrower set of markets in late 2025. That was a major moment for the company, which had spent years operating in a legal gray area and was now able to do business openly in the world’s largest economy. But with legitimacy came scrutiny. If Polymarket wanted to be a regulated player in American financial markets, it would have to accept that regulators would hold it to a higher standard. The company’s position, at least publicly, has been cooperative. “While we do not comment on specific investigations, we regularly refer matters to law enforcement and support ongoing investigations as part of our commitment to protecting the integrity of our markets,” Olivia Chalos, deputy chief legal officer at Polymarket, told WIRED in an email. That message is carefully worded. It does not confirm or deny any investigation into the company. It does not admit wrongdoing. But it does suggest that Polymarket understands the importance of being seen as a responsible actor. The company has a great deal at stake. It recently underwent a fundraising round led by Donald Trump Jr.’s venture capital firm, 1789 Capital, which valued the company at a breathtaking $21 billion. For a prediction market that has been around for only a few years, that valuation represents an enormous vote of confidence from investors who believe that betting on real-world events will become a permanent and profitable part of the financial landscape. But a $21 billion valuation also creates a target. Regulators, lawmakers, and the public will inevitably ask whether a company that makes money from people wagering on the news has become too powerful, too opaque, or too willing to let insiders profit at the expense of ordinary users. The investigations into suspicious traders are, in a sense, also investigations into the health of Polymarket’s own marketplace. If the platform is rife with insider trading, its entire business model could be called into question. Fair and transparent markets are the foundation of any exchange, whether it trades corn futures, oil contracts, or bets on presidential pardons. Polymarket has an interest in rooting out bad actors, but whether it can do so effectively while also maintaining its explosive growth is another question entirely.
The CFTC’s scrutiny is not limited to Polymarket. The agency has also launched investigations into potential insider trading on Kalshi, Polymarket’s archrival, in the past. According to The New York Times, Kalshi has referred at least 32 cases to the agency, which suggests that the problem of informed trading is widespread across prediction markets, not unique to any one platform. Perhaps the most colorful example involves George Santos, the former United States representative from New York who became infamous for a web of lies about his background. Santos placed bets on a Kalshi contract asking whether he would attend President Trump’s 2026 State of the Union address. That might seem like a harmless stunt, except that Santos was, at least nominally, in a position to know the answer. The CFTC fined him $35,000 for his behavior, while Kalshi issued its first-ever lifetime ban to Santos for violating its rules on market manipulation. Kalshi also fined him just over $71,000, meaning that the total financial penalty was more than $100,000. Santos was not criminally charged, and he may not have been a masterful trader, but his case illustrates the strange and evolving nature of prediction market regulation. It also shows that the CFTC is willing to use its enforcement powers in ways that are both serious and, at times, almost absurd. A contract about whether a disgraced congressman will show up to a speech is a far cry from a contract about a multimillion-dollar trade driven by classified information. But both fall under the same regulatory umbrella, and both raise the same fundamental question: what is fair game in a prediction market, and what is fraud? The Santos case may seem like a minor footnote in the broader universe of financial regulation, but it is actually a perfect illustration of why the CFTC might be struggling to keep up. Prediction markets are new, creative, and often silly. They blend politics, pop culture, current events, and finance in ways that defy easy categorization. The rules that govern them cannot simply be copied from the stock market, because the underlying assets are so different. A share of Apple stock represents a claim on a real company. A contract on Polymarket represents a wager on a future fact. That distinction matters, and regulators are still learning how to navigate it.
Taken together, these newly revealed investigations are a powerful reminder that prediction markets have outgrown their reputation as a quirky corner of the internet. They are now big business, with billions of dollars flowing through platforms that look less like gambling sites and more like financial exchanges. That growth has brought enormous opportunities, but it has also brought the darker side of finance: insider trading, market manipulation, and the age-old human desire to profit from secrets. The CFTC’s decision to open investigations into pardon trades, Iran contracts, and Google search events is not just a response to suspicious behavior. It is an acknowledgment that the agency must adapt to a world where information itself is a tradable commodity. The challenge is that information moves faster than regulation. A trader who learns about a presidential pardon before it is announced can convert that knowledge into cash in a matter of seconds. By the time a journalist writes an article and a regulator opens an investigation, the money has already been made. The CFTC’s orders, sealed and quiet, are the tools the government uses to try to pull the story back together. They are a sign that someone is watching, even if that someone is often reacting rather than anticipating. The real test will be whether these investigations lead to meaningful enforcement and whether they deter others from trying to game the system. If the CFTC simply goes through the motions, it will have done little to protect the integrity of prediction markets. But if these investigations uncover real misconduct and punish it, they could serve as a warning that the new world of event betting is not beyond the reach of the law. For traders, the message is simple: the house may be new, but it can still deal you out. For the rest of us, these quiet paper trails behind the scenes are a reminder that even the most futuristic corners of finance remain governed by old-fashioned principles of fairness, transparency, and trust. The question is whether the regulators can keep up with the pace of innovation, and whether the platforms themselves will cooperate with the very authorities that are responsible for their oversight. The next few months may show whether the government’s quiet investigations are the beginning of a new era of accountability, or just another chapter in the endless game of catch-up between law and technology.
