The White House is reviewing a formal Commodity Futures Trading Commission proposal to regulate prediction markets, while a Google software engineer was charged with generating more than $1.2mn in profits on Polymarket using confidential company data, intensifying scrutiny of a sector whose regulatory status remains unresolved.
White House Reviews CFTC Prediction Market Rules as Google Employee Charged with Insider Trading
28 May 2026 - 13:44 CEST
By Matt Neill
The CFTC filing, submitted to the Office of Management and Budget on 26 May, contains no public details of the proposal's contents. The agency said it would have more to say once the review is complete. The proposal is expected to draw on more than 3,000 public responses to an earlier CFTC request for comment on how to govern the space, including on insider trading and permitted contract types.
Separately, on 27 May Michele Spagnuolo, 36, a Swiss-resident Italian national and Google engineer, was charged by the US Attorney's Office for the Southern District of New York with commodities fraud, wire fraud and money laundering.
Operating under the alias AlphaRaccoon on Polymarket, Spagnuolo allegedly risked approximately $2.75mn on Google-related markets between October and December 2025 using nonpublic internal data, netting approximately $1.2mn after the information became public. He faces a maximum of 20 years in prison if convicted on the wire fraud count.
Pushback mounts
The Spagnuolo case follows the April arrest of a US soldier who allegedly used classified military intelligence to profit more than $400,000 on Polymarket, and a multitude of investigations identifying Polymarket users with suspicious trading characteristics.
House Oversight Committee chair James Comer launched a congressional investigation into both Polymarket and Kalshi on 22 May over insider trading concerns, requesting documents on identity verification and anomalous trading from both chief executives by 5 June.
Resistance to the CFTC's jurisdictional claims is also mounting. Minnesota this month became the first US state to ban prediction markets outright, prompting a CFTC federal lawsuit the following day.
Meanwhile, Spain's Consumer Rights Ministry simultaneously banned Polymarket and Kalshi, citing the absence of mandatory gambling licences, with a formal probe expected to last three to four months. Bills targeting the industry have been introduced in 14 additional US states.
Political and legal fault lines
US President Trump personally intervened on 26 May, posting on Truth Social that it was "critically important" that the CFTC maintain exclusive authority over prediction markets and named several Democratic state officials by name as opponents.
The CFTC has already issued a blanket no-action letter standardizing reporting relief for event contract operators, signalling its intent to lower compliance barriers for compliant venues regardless of the jurisdictional outcome.
The combination of a formal rule-making process now under White House review, active litigation in multiple states and a potential trajectory in the US Supreme Court suggests the sector's regulatory framework will remain contested for several years, even as trading volumes and institutional participation continue to grow.
