Google engineer Spagnuolo, placed on leave, denies that his alleged $1.2 million Polymarket profits amounted to insider trading, arguing that he was simply gambling. His case matters because it could help determine whether prediction-market contracts are federally regulated financial swaps or state-regulated gambling, a dispute that may ultimately reach the US Supreme Court.

Prosecutors accuse Spagnuolo, who allegedly used the alias “AlphaRaccoon”, of commodities fraud, wire fraud and money laundering after wagers including one correctly predicting that singer D4vd would be Google’s most-searched person in 2025. His lawyers also challenge US jurisdiction, saying he is not a US citizen and made the trades while living in Zurich on Polymarket’s non-US platform; they further argue the information allegedly used had no commercial value to Google. A separate case involving soldier Gannon Ken van Dyke, accused of earning more than $400,000 from Polymarket wagers, raises similar arguments, while the CFTC maintains such contracts are swaps.