Bloomberg Found $200 Million in Suspicious Wagers on Kalshi and Polymarket. An Army Sergeant Has Already Been Indicted.
A Bloomberg investigation identified approximately $200 million in wagers on Kalshi and Polymarket between January and June 2026 displaying characteristics associated with potential insider trading — concentrated in geopolitical event markets. A federal indictment unsealed in April charged US Army Master Sergeant Gannon Ken Van Dyke with using classified information about Operation Absolute Resolve, the operation that captured Venezuelan President Nicolás Maduro, to generate $409,000 in profit. 57% of wallets with unusually successful returns were created within 24 hours of placing bets. The House Oversight Committee has launched a formal investigation.
A Bloomberg investigation published July 20 identified approximately $200 million in wagers on Kalshi and Polymarket between January and June 2026 that displayed characteristics associated with potential insider trading, with geopolitical event markets — including those covering tensions with Iran and political developments in Venezuela — accounting for a significant portion of the suspicious activity. The most striking detail in the dataset: 57% of wallets with unusually successful returns were created within 24 hours before placing the bets that generated those returns. Fresh accounts, consistently profitable, on markets tied to events that subsequently occurred — a pattern that analysts say is difficult to explain without access to non-public information.
The investigation has already produced a federal criminal case. A grand jury indictment unsealed on April 24, 2026, charges US Army Master Sergeant Gannon Ken Van Dyke with using classified intelligence about Operation Absolute Resolve — the operation that led to the capture of Venezuelan President Nicolás Maduro — to place wagers that generated more than $409,000 in profit. Van Dyke had access to mission-critical intelligence ahead of the operation and is alleged to have converted that foreknowledge into prediction market positions before the news was public. The case is the first federal criminal prosecution of a prediction market participant for insider trading and establishes that the conduct can be prosecuted under existing law — even though prediction markets did not exist when the insider trading statutes were written.
Both platforms say they have implemented screening measures. Kalshi now collects employment data from users in certain markets to identify prohibited participants, bars politicians from wagering on their own campaigns, and bars athletes from betting on markets tied to their own sports. But Bloomberg found that new evasion techniques are emerging faster than the platforms can counter them — fresh wallets, proxy accounts, and structuring bets across multiple accounts to stay below detection thresholds. The House Oversight Committee, led by Chairman James Comer, launched a formal investigation into insider trading on prediction market platforms following the Bloomberg report. The investigation follows directly from the House Agriculture Committee hearing on July 22, where integrity monitoring was a central issue, and from the Group of Copenhagen's report on the same day flagging the Polymarket market on Folarin Balogun's availability — which was opened before FIFA publicly confirmed his suspension had been lifted.
The insider trading problem is structurally different from the state-versus-federal regulatory dispute over sports event contracts. A state attorney general suing over sports gambling enforcement is a known quantity: courts can apply existing law, platforms can geofence, and the CFTC can preempt or not. Insider trading on geopolitical prediction markets is harder to contain. The markets that attracted the most suspicious activity are precisely the ones that generate the clearest information signal — which candidate will win, which operation will succeed, which policy will change — because they involve participants who may have access to information that markets cannot price. Whether prediction markets can solve that problem with technology, or whether regulators need to impose new rules, is now an open question at both the Justice Department and on Capitol Hill.
Operators mentioned in this article
Recent updates
Kalshi's Parlays Drive Back-to-Back $5B Days — and Hand Critics Their Strongest Argument
Kalshi traded a record $5.33 billion on November 7 and $5.36 billion on November 8, with multi-leg parlay-style 'combos' making up roughly 75% of both days' volume. Its 30-day volume topped $100 billion. But the parlay dominance cuts against the platform's legal defense: parlays are a quintessential sportsbook product, and the American Gaming Association has told the Second Circuit that parlays make up about two-thirds of Kalshi's volume and should be treated as sports bets. The implied house edge on 10-plus-leg combos is around 25%, undercutting the argument that these are neutral financial instruments rather than gambling.
Cruz Bill Would Require State or Tribal Approval for Sports Contracts — a Bipartisan Legislative Threat Emerges
Senator Ted Cruz, who chairs the Senate Commerce Committee, is preparing a bill that would bar federally regulated prediction markets from offering gambling-tied event contracts, including sports, unless a state or tribal government authorizes them. It would not ban the contracts nationwide but would require platforms to obtain approval jurisdiction by jurisdiction, resembling state-by-state sportsbook regulation. The proposal arrives as Democrats take control of both chambers after the midterms, creating a potential bipartisan reckoning: a Republican committee chair and a newly skeptical Democratic majority both eyeing restrictions on a sector that had relied on federal protection.
CFTC Tells Platforms to Stop Geofencing States — Directly Colliding With State Court Orders
The CFTC issued an interpretation on November 5 of its 'impartial access' core principle, telling regulated exchanges including Kalshi and Polymarket to drop state-by-state geographic blocks within 30 days or explain why they cannot. The demand collides head-on with existing state court orders that require the platforms to geofence: Washington ordered Kalshi to geofence in August, and Michigan ordered it to use licensed geolocation to block the state in September, with a $500,000 daily fine for violations. Chairman Michael Selig framed the interpretation as a uniformity requirement. The platforms are now caught between a federal demand to unblock states and state court orders to block them.