Inside the Prediction Markets: DraftKings Bets on the CFTC Model
DraftKings filed its first event contract templates with the CFTC this week. At the same time, U.S. authorities charged a Google employee with using confidential company data to trade on Polymarket, while the gambling industry intensified its criticism of prediction markets.
Here’s what mattered this week.
The Insider Who Knew Too Much
On May 27, U.S. authorities charged a Google employee with using confidential company data to trade on Polymarket.
According to the DOJ and the CFTC, Michele Spagnuolo used non-public information about Google’s annual Year in Search rankings to place a series of highly profitable bets on prediction markets, earning roughly $1.2 million.
The case resulted in both criminal and civil charges, making it one of the most prominent insider trading actions yet involving a prediction market platform.
The case gives regulators a concrete example of the insider trading risks they have been warning about as prediction markets move further into the financial mainstream.
DraftKings Moves Further Into the CFTC Model
DraftKings is expanding its push into federally regulated event contracts through its DKeX exchange.
On May 22, the company filed its first event contract templates with the CFTC, covering a range of sports-related markets.
The contracts are expected to begin listing after May 27.
Unlike traditional sportsbooks, DKeX operates as a Designated Contract Market under CFTC oversight. That structure allows event contracts to be offered under a single federal framework rather than through separate state betting licenses.
The move highlights a broader shift in the industry. Instead of expanding through state-by-state sportsbook approvals, firms are increasingly exploring whether prediction markets can scale more efficiently through federal derivatives regulation.
DraftKings Exchange (DKeX) says in a newly-posted CFTC filing that its Market Maker Program will become effective June 8. Virtually all details are confidential. Below are the publicly available fees posted on its website. pic.twitter.com/rv59kRmCGy
— Fairplaygov (@fairplaygov) May 28, 2026
The Rulebook Is Finally Coming
On May 26, the CFTC formally submitted its prediction markets proposal for White House review, beginning the federal rulemaking process.
The contents of the proposal have not been published. But the move marks a shift from enforcement and litigation toward formal regulation.
For the past two years, prediction markets have expanded through court battles, no-action letters, and agency guidance. Platforms have built compliance programs largely by interpreting how existing derivatives rules might apply to event contracts.
That process is now moving into a new phase.
Whatever ultimately emerges from the CFTC’s rulemaking effort is likely to become the foundation for how prediction markets operate in the United States.
Quote of the Week
The gambling industry is becoming more explicit in its criticism of prediction markets.
American Gaming Association President and CEO Bill Miller argued this week that the growth of event contracts is already affecting state tax revenues and tribal gaming operations.
“It’s about states and tribes that are losing literally a billion dollars today in state and tribal revenue that would otherwise go to fund important community projects.”
— Bill Miller, President and CEO, American Gaming Association, said on CNBC Squawk Box.
Number of the Week
$24 billion is combined monthly trading volume across Kalshi and Polymarket, according to data cited by the Pew Research Center.
Less than a year ago, the two platforms handled under $5 billion per month. Today, combined volume is approaching $24 billion — one reason regulators, brokers, gambling operators, and exchanges are all competing to shape what prediction markets become next.
Combined monthly global trading volume on #Kalshi and #Polymarket, the two leading prediction markets, has risen from less than $5 billion to about $24 billion in less than a year.
Prediction markets allow people to trade on the outcome of real-world events, from basketball… pic.twitter.com/6YJvAggspg
— Pew Research Center (@pewresearch) May 27, 2026
Bottom Line
This week brought three pieces of the same puzzle into view.
The Google case showed why regulators want formal rules around prediction markets.
DraftKings’ CFTC filings showed why firms increasingly want a federal framework instead of state-by-state gambling regulation. And the CFTC’s rulemaking proposal showed that the agency is finally moving from enforcement and litigation toward writing those rules.
The debate over whether prediction markets are gambling products or financial derivatives is far from settled. But the market is already being built around the assumption that federal regulation will determine its future.
DraftKings filed its first event contract templates with the CFTC this week. At the same time, U.S. authorities charged a Google employee with using confidential company data to trade on Polymarket, while the gambling industry intensified its criticism of prediction markets.
Here’s what mattered this week.
The Insider Who Knew Too Much
On May 27, U.S. authorities charged a Google employee with using confidential company data to trade on Polymarket.
According to the DOJ and the CFTC, Michele Spagnuolo used non-public information about Google’s annual Year in Search rankings to place a series of highly profitable bets on prediction markets, earning roughly $1.2 million.
The case resulted in both criminal and civil charges, making it one of the most prominent insider trading actions yet involving a prediction market platform.
The case gives regulators a concrete example of the insider trading risks they have been warning about as prediction markets move further into the financial mainstream.
DraftKings Moves Further Into the CFTC Model
DraftKings is expanding its push into federally regulated event contracts through its DKeX exchange.
On May 22, the company filed its first event contract templates with the CFTC, covering a range of sports-related markets.
The contracts are expected to begin listing after May 27.
Unlike traditional sportsbooks, DKeX operates as a Designated Contract Market under CFTC oversight. That structure allows event contracts to be offered under a single federal framework rather than through separate state betting licenses.
The move highlights a broader shift in the industry. Instead of expanding through state-by-state sportsbook approvals, firms are increasingly exploring whether prediction markets can scale more efficiently through federal derivatives regulation.
DraftKings Exchange (DKeX) says in a newly-posted CFTC filing that its Market Maker Program will become effective June 8. Virtually all details are confidential. Below are the publicly available fees posted on its website. pic.twitter.com/rv59kRmCGy
— Fairplaygov (@fairplaygov) May 28, 2026
The Rulebook Is Finally Coming
On May 26, the CFTC formally submitted its prediction markets proposal for White House review, beginning the federal rulemaking process.
The contents of the proposal have not been published. But the move marks a shift from enforcement and litigation toward formal regulation.
For the past two years, prediction markets have expanded through court battles, no-action letters, and agency guidance. Platforms have built compliance programs largely by interpreting how existing derivatives rules might apply to event contracts.
That process is now moving into a new phase.
Whatever ultimately emerges from the CFTC’s rulemaking effort is likely to become the foundation for how prediction markets operate in the United States.
Quote of the Week
The gambling industry is becoming more explicit in its criticism of prediction markets.
American Gaming Association President and CEO Bill Miller argued this week that the growth of event contracts is already affecting state tax revenues and tribal gaming operations.
“It’s about states and tribes that are losing literally a billion dollars today in state and tribal revenue that would otherwise go to fund important community projects.”
— Bill Miller, President and CEO, American Gaming Association, said on CNBC Squawk Box.
Number of the Week
$24 billion is combined monthly trading volume across Kalshi and Polymarket, according to data cited by the Pew Research Center.
Less than a year ago, the two platforms handled under $5 billion per month. Today, combined volume is approaching $24 billion — one reason regulators, brokers, gambling operators, and exchanges are all competing to shape what prediction markets become next.
Combined monthly global trading volume on #Kalshi and #Polymarket, the two leading prediction markets, has risen from less than $5 billion to about $24 billion in less than a year.
Prediction markets allow people to trade on the outcome of real-world events, from basketball… pic.twitter.com/6YJvAggspg
— Pew Research Center (@pewresearch) May 27, 2026
Bottom Line
This week brought three pieces of the same puzzle into view.
The Google case showed why regulators want formal rules around prediction markets.
DraftKings’ CFTC filings showed why firms increasingly want a federal framework instead of state-by-state gambling regulation. And the CFTC’s rulemaking proposal showed that the agency is finally moving from enforcement and litigation toward writing those rules.
The debate over whether prediction markets are gambling products or financial derivatives is far from settled. But the market is already being built around the assumption that federal regulation will determine its future.
