According to federal prosecutors, Michele Spagnuolo made more than $1 million on the prediction market platform using confidential information about Google Search traffic. A Google security engineer has been charged with crimes stemming from allegedly placing trades on Polymarket using confidential internal information from the tech giant. Michele Spagnuolo, a 36-year-old Italian citizen, was arrested this morning in New York, as first reported by ABC News. Spagnuolo is charged with one count each of commodities fraud, wire fraud, and money laundering. He has worked at Google since 2014 and was based out of the company's Zurich, Switzerland, offices.

CFTC chairman Michael Selig sat down with WIRED to discuss how the agency scours Polymarket and other prediction markets for illegal activity. For most of the past year, it looked like prediction markets had kicked off a new golden age of fraud. On Polymarket, traders raked in fortunes from suspiciously timed bets on geopolitical events like the raid on Venezuela and the Iran War. It wasn't clear whether the US government would bother pursuing some of the most flagrant bad actors, since Polymarket's crypto-based platform was technically offshore and not regulated or licensed within the country. Now, however, the Commodity Futures Trading Commission, which oversees prediction markets, wants you to know that it's watching very, very closely.

Truth Predict was supposed to be the Trump family's biggest leap yet into prediction markets. Now it's looking more like a tiptoe. The odds that the Trump family will launch a full-fledged prediction market product this year just plummeted. Last year, the Trump Media and Technology Group announced Truth Predict, a partnership with the cryptocurrency company Crypto.com. The initial announcement touted Truth Predict as a "new product" that would allow Truth Social users to make trades on sports, inflation, elections, and more through an "embedded" prediction market service.

Mark Moran, an underdog Senate candidate from Virginia, claims he wanted to get caught violating the prediction market platform's rules. Kalshi announced Wednesday that it had taken action against three US politicians for violating the prediction market platform's rules on insider trading. One of the candidates, Mark Moran, a former investment banker and contestant on the reality dating show, is running a long-shot campaign for US Senate in Virginia against incumbent Mark Warner. According to Moran, getting caught was actually his plan all along: "I bet $100 on myself, not denying that, I did do it," he tells WIRED. "I wanted to see if they would enforce it."

A new executive order seen by WIRED prohibits New York state employees from using insider knowledge to enrich themselves with prediction market bets. New York has banned state employees from using insider information to trade on prediction markets . In an executive order signed today and viewed by WIRED, Governor Kathy Hochul forbade the state's government workforce from using "any nonpublic information obtained in the course of their official duties" to participate on prediction market platforms, or to help others profit using those services. "Getting rich by betting on inside information is corruption, plain and simple," Hochul said in a statement provided to WIRED. "Our actions will ensure that public servants work for the people they represent, not their own personal enrichment. While Donald Trump and DC Republicans turn a blind eye to the ethical Wild West they've created, New York is stepping up to lead by example and stamp out insider trading."

As the prediction market boom continues, backlash is growing, too, with Arizona filing criminal charges against Kalshi and public outcry after Polymarket traders threatened a journalist. Kalshi CEO Tarek Mansour posted a video on Wednesday of six men decked out in business casual doing push-ups on the sidewalk. "This is how Kalshi Q1 board meeting ended," he wrote on X. The board members are laughing and smiling in the video after their impromptu cardio session, and the mood is jubilant. The next day, it became clear that the team had ample reason to celebrate: Kalshi had just raised $1 billion at a $22 billion valuation, making the company worth on paper roughly double what it was only a few months ago.

A judge ordered Kalshi to immediately halt sports and election contracts in the state, intensifying a growing regulatory battle over prediction markets. Kalshi has been temporarily banned in Nevada, marking the latest escalation in the widening regulatory war over prediction markets. The First Judicial District Court of Nevada has issued a 14-day restraining order, effective immediately, barring the company from "offering a derivatives exchange and prediction market which offers event-based contracts relating to sports, election, and entertainment related events" without first obtaining gaming licenses. This is the first time a US state has forced the company to cease operations. This particular legal battle began just over a year ago, when Nevada regulators sent Kalshi a cease-and-desist letter demanding that it stop offering sports-related events contracts.

As the legal war over how to regulate prediction markets rages on, financial institutions are embracing the industry anyway. When Troy Dixon first suggested incorporating prediction markets into the electronic trading platform where he works, he was met with incredulity. "People told us we were crazy," Dixon, Tradeweb's cohead of global markets, tells WIRED. But after the company announced it was partnering with Kalshi in February, Dixon says, the mood changed dramatically. "We've been inundated with calls," he says.

Prediction markets like Kalshi and Polymarket are booming, and so is a fight among regulators, lawmakers, and advocates over their legality. Former New Jersey governor Chris Christie, who currently serves as an advisor to the American Gaming Association, has criticized prediction markets. The political fight in the US over the future of prediction markets like Polymarket and Kalshi has escalated into a full-blown war, and battle lines aren't being neatly drawn along party lines. Instead, conservative Mormons have aligned themselves with Las Vegas bigwigs and MAGA royalty is siding with liberal Democrat lobbyists. One side argues that the platforms are breaking the law by operating as shadow casinos.

As prediction market platforms like Polymarket and Kalshi battle regulators in court, Senate Democrats are urging the CFTC to avoid weighing in, escalating a broader fight over the burgeoning industry. Senator Adam Schiff, a Democrat from California, is leading the group of lawmakers urging the CFTC to stay out of state prediction market lawsuits. A group of 23 Democratic US senators sent a letter Friday to the top federal regulator overseeing prediction markets, urging the agency to avoid weighing in on pending court cases over the legality of offerings on the platforms tied to "sports, war, and other prohibited events." Prediction markets, which sell contracts tied to the outcome of real-world developments, have exploded in popularity over the past year, attracting an increasingly mainstream fanbase eager to wager on everything from geopolitical conflicts to fashion choices to the Super Bowl. As they expanded, the platforms have become a magnet for ethical and legal controversies.