CFTC names insider trading its top prediction market priority

David Miller said it plainly at the Next Predict Summit in New York: the belief that insider-trading laws do not apply to prediction markets is incorrect, and his division intends to prove it through enforcement.

Miller, appointed director of enforcement by CFTC Chairman Michael Selig, was describing a shift that had already begun in April, when the CFTC brought charges against Army Master Sgt. Gannon Ken Van Dyke. The allegation was specific: Van Dyke had helped plan and execute the operation to capture former Venezuelan President Nicolás Maduro, then traded on Polymarket using information no one outside that operation could have had. The CFTC says he made more than $400,000. Van Dyke has pleaded not guilty. His federal criminal trial is scheduled for December 7.

A second case followed in May. Michael Spagnuolo, a Google software engineer, faces parallel civil and criminal charges from the CFTC and the Department of Justice for trading on Polymarket using confidential corporate data. The complaints put his exposure at $2.75 million across multiple contracts and his alleged profit at roughly $1.2 million.

Two cases in seven months is not a pattern yet. But Miller was not hedging. "We've been bringing insider trading cases for over a decade," he said, "but this was the first one with prediction markets." The February advisory from the Division of Enforcement made the legal theory explicit before the second case was filed — which is the sequencing of an agency building a record, not reacting to one.

The legal architecture here is worth slowing down on. Miller's explanation at the summit went to the duty question that sits at the center of every insider-trading case. The violation is not knowing something. It is trading on something you have a duty not to trade on — a duty owed to shareholders, to a principal, to the chain of command. Van Dyke's alleged duty ran to the U.S. government. Spagnuolo's ran to Google. The market being a prediction contract rather than a stock does not dissolve either duty. The CFTC's position, stated plainly, is that commodity derivatives law has always reached this conduct and prediction markets do not create an exemption.

That position has an obvious implication for political candidates who trade on their own races — a category Miller declined to discuss specifically, though he did not dispute that it had already happened.

What the CFTC cannot resolve through enforcement is the jurisdictional question that sits underneath all of it. The agency's authority over event contracts flows from its CFTC mandate, and that mandate is contested in circuit courts, in state gaming commissions, and in the New York subpoena litigation that is already before a Manhattan court. Miller's enforcement priorities assume a legal foundation that is still being argued.

I have watched regulators announce enforcement priorities in spaces where the underlying jurisdictional question was unresolved. The priority announcements hold. The cases get complicated. Van Dyke's trial in December will be the first real test of whether a jury will follow the CFTC's duty theory into prediction market territory. If it does, Miller's two-case record becomes something prosecutors in the next administration can build from.