- A U.S. Army Special Forces master sergeant was charged in April with using classified information to make more than $409,000 on Polymarket from bets on the secret operation that captured Venezuelan leader Nicolas Maduro. It is the first federal criminal case ever filed over prediction market trading.
- Kalshi suspended three congressional candidates that same week for betting on their own primary races. The bans run five years. The fines ranged from $539 to $6,229.
- A separate Kalshi probe in February punished a video editor for YouTube creator MrBeast and a California congressional candidate who publicly promoted his own bet on his race.
- NPR reported earlier this month that campaign staffers have told the outlet they make "thousands" betting on their own candidates. Federal ethics rules do not yet cover prediction market activity.
- The cases arrive as the two largest U.S. prediction markets crossed a combined $5.6 billion in weekly volume this month, with election markets making up an increasing share of the total.
- The Commodity Futures Trading Commission has filed parallel civil actions in the Van Dyke case but has not announced an industry-wide rulemaking on insider trading.
WASHINGTON -- In the predawn hours of Jan. 3, U.S. Special Forces apprehended Nicolas Maduro at a residence in Caracas. Hours later President Trump announced the operation to the world. Within minutes, Polymarket contracts tied to Maduro's removal jumped from low double digits to near 100%.
The first wave of profit went to people who had bet correctly in the days leading up to the raid. One of them, federal prosecutors say, was a master sergeant who had helped plan it.
Gannon Ken Van Dyke, 38, was arrested on April 23. The indictment unsealed in Manhattan federal court accuses the Fort Bragg-based Special Forces soldier of placing approximately 13 bets totaling roughly $33,000 between Dec. 27 and Jan. 2 on Polymarket contracts tied to whether Maduro would be removed, whether U.S. forces would enter Venezuela, and whether Trump would invoke war powers against the country, all by Jan. 31.
The bets returned more than $409,000. Van Dyke withdrew the proceeds the same day Trump announced the operation, moved most of them into a foreign cryptocurrency vault, then asked Polymarket to delete his account three days later, claiming he had lost access to his email.
He is charged with wire fraud, commodities fraud, unlawful use of confidential government information, theft of nonpublic government information and making an unlawful monetary transaction. The Commodity Futures Trading Commission filed a parallel civil complaint.
It is the first criminal case the federal government has ever brought over prediction market wagers.
The Three Candidates Who Bet on Themselves
The Van Dyke arrest came in the same week Kalshi announced a separate set of enforcement actions that hit closer to the daily mechanics of an election year.
On April 22, Kalshi disclosed it had suspended and fined three congressional candidates for betting on their own primary races. The bans run five years. The cases were the first "political insider trading" actions the platform has publicly disclosed against sitting candidates.
The three:
- Mark Moran, an independent candidate for U.S. Senate in Virginia. Originally a Democratic primary challenger to Sen. Mark Warner, Moran said he placed roughly $100 in bets on himself as a deliberate publicity stunt to highlight what he called the influence of prediction markets on elections. He was fined $6,229.30 after refusing to sign a settlement.
- Matt Klein, a Democratic state senator running in Minnesota's 2nd Congressional District primary. Klein said he placed a $50 bet on himself last October out of curiosity about how the platform worked, did not realize it violated platform rules at the time, and apologized. He was fined $539.85.
- Ezekiel Enriquez, a Republican who ran in the March primary for Texas's 21st Congressional District and finished with about 1% of the vote behind Trump-endorsed Mark Teixeira. Enriquez bet less than $100 on his own race and cooperated with the Kalshi probe.
Kalshi said the three were flagged by what the company called "newly released safeguards to block political candidates from trading on their own elections." Robert DeNault, the company's head of enforcement, described the conduct as "political insider trading" in the company's statement.
The fines were small. The signal was not. Kalshi was making the point that candidates betting on their own outcomes is now off-limits, and the platform was willing to publicly punish three sitting candidates to make it.
The February Cases Set the Pattern
The April actions did not come out of nowhere. Kalshi disclosed two earlier enforcement cases in February that set the template.
The first involved Kyle Langford, a former California gubernatorial candidate who publicly posted a video of his $98.76 bet on himself on X in May 2025 and encouraged followers to do the same. Kalshi banned him for five years and fined him $2,000. He is currently running for Congress.
The second case involved a YouTube video editor for MrBeast, the creator with one of the largest YouTube audiences in the world. Kalshi flagged the editor for what the company called "statistically extreme" wins on markets tied to MrBeast video performance, suspended the account and assessed a fine.
Kalshi said at the time it had opened nearly 200 internal probes since launch.
Campaign Staffers, Quietly
The structural problem is bigger than candidates betting on themselves.
NPR reported earlier this month that campaign staffers told the outlet they make "thousands" trading on prediction markets tied to candidates they work for, candidates they have firsthand information about, and candidates whose private polling they have seen.
There is no federal law that uniformly prohibits this. The CFTC has jurisdiction over Kalshi. Polymarket operates offshore for U.S. users. House and Senate ethics rules require disclosure of certain financial holdings but were written for stocks and bonds, not prediction market contracts. Federal employee ethics rules, which would cover anyone serving in the Trump administration, apply only where the trader has a specific legal duty to keep information secret. That is the legal hook the Van Dyke prosecution relies on.
Outside the federal employee context, no such duty automatically exists for a private citizen with informational advantage. A campaign manager who knows the candidate's internal numbers and trades on Kalshi is in a gray area that Congress has not yet written law for.
Both parties have raised concerns. Neither has acted.
The Iran Trades Nobody Has Explained
The Van Dyke case is the most prominent, but it is not the only one prosecutors are looking at.
CNN and other outlets reported earlier this year on a series of well-timed, highly lucrative trades placed on Polymarket in the days before U.S. and Israeli strikes on Iran in February. The trades took the "yes" side of contracts on whether strikes would occur by specific dates. The bettors won. The identities have not been disclosed.
NPR reported separately that a single Polymarket trader made roughly $300,000 correctly betting on the last-minute pardons issued by President Biden in his final days in office. The pardons were not announced publicly until the day of issuance. The trader has not been named.
Each case adds to the question prosecutors will eventually have to answer: where does informed political analysis end, and where does insider trading begin?
Why It Matters for the 2026 Cycle
The cases land at a moment when prediction markets are not a side feature of the political conversation. They have become a primary one.
Kalshi's leading political markets right now include the Texas Republican Senate primary that decided Tuesday, the Los Angeles mayoral race, and 2028 presidential nomination contracts. Polymarket's 2026 midterm balance-of-power market has traded close to $2.5 million in volume. The site's "Which party will win the House" market currently gives Democrats an 81% chance of flipping the chamber.
When the prices on those markets move, news organizations and traders both treat the movement as signal. If the people moving the prices have access to information that has not yet reached the public, the signal is corrupted at the source.
The Trump administration has not staked out a clear position on the issue. Asked about the Van Dyke arrest, the president told reporters: "You know the whole world, unfortunately, has become somewhat of a casino."
His son, Donald Trump Jr., signed on last year as an adviser to both Polymarket and Kalshi.
What Comes Next
Three things are worth watching over the rest of 2026.
The Van Dyke prosecution. It is the first criminal case ever filed over prediction market trading. A conviction would set a precedent for charging federal employees who trade on classified information. An acquittal or a plea would establish a baseline of what the government will and will not pursue.
Whether the CFTC moves on rulemaking. The commission has the authority to require Kalshi to identify candidate and campaign-staff traders and block their trades. It has not done so industry-wide.
Whether Congress acts. Bipartisan concern has been growing. Bipartisan action has not. With midterms five months away and prediction markets now woven into campaign finance, polling analysis and news coverage, the political incentive to look the other way may finally start to break.
For live odds on the 2026 midterms, the 2028 presidential race and every active U.S. election market on Polymarket and Kalshi, see the Election Odds homepage.
The 2026 midterm elections are November 3, 2026.
