A Jury Will Decide Whether an “Event Contract” Constitutes a “Swap” For Purposes of Criminal Liability Under the Commodities Exchange Act
A judge in the Southern District of New York recently gave prosecutors the green light to bring criminal charges under the Commodities Exchange Act (CEA) based on foul play in prediction markets.
Earlier this year, the government brought charges against Gannon Van Dyke, a Master Sergeant with the U.S. Army Special Forces, who was involved in the planning and execution of the military operation that resulted in the apprehension of the former president of Venezuela. Van Dyke used the information to which he was privy to place bets in a prediction marketplace known as Polymarket. For example, just two days before the U.S. apprehended the Venezuelan president, Van Dyke placed substantial bets on whether the president would be out of power within the next 30 days. Van Dyke reaped profits of $437,859 on the $33,934 he used to purchase the event contracts on Polymarket. The government subsequently charged him with a range of criminal offenses, including violations of the CEA.
On October 26, 2026, U.S. District Judge Margaret Garnett rejected Van Dyke’s argument that the event contracts alleged in the indictment were not “swaps” within the meaning of the CEA, a threshold requirement for the Act to even apply. Van Dyke warned in his papers that treating his conduct as a commodities “swap” would “sweep every tableside bet on who will win an election … into federal regulatory jurisdiction.” Judge Garnett noted that she had “not identified any authority squarely addressing the question raised here.” Nonetheless, she concluded that “the Court need not wade into the thicket of the parties’ interpretive dispute.” Instead, the court held that whether the geopolitical event contracts at issue “are ‘associated with financial, economic, or commercial consequence’ [for purposes of the CEA] turns on the nature of those contracts and their relationship to the underlying events—factual questions that cannot be resolved on a motion to dismiss.” In other words, whether an event contract is a “swap” is a jury question, not a legal question of statutory interpretation.
It appears that the government wisely chose the Van Dyke matter as its test case. The indictment describes Van Dyke as a high-ranking military official who signed a confidentiality agreement, in which he acknowledged that the information to which he became aware was government property and further that he occupied a duty of trust and confidence. He took advantage of his position and knowledge of highly sensitive military secrets to place bets that he knew he would win. Had Van Dyke been a corporate insider and the event contracts instead shares of a publicly traded stock, this would be an easy case of insider trading.
The implications of the decision are nonetheless noteworthy insofar as the Court rejected Van Dyke’s invitation to engage in statutory interpretation (as a matter of law) and instead asked the jury to decide if the event contracts qualified as swaps under the CEA (as a matter of fact). In a criminal case, where there is no summary judgment process, this means that if the government merely alleges that an event contract is a “swap,” it has a path to a jury for a determination of whether the CEA applies. Should a technical question of this nature, which turns on definitional regulatory language, be left to a jury? Apparently so. We will be interested to see if other courts follow Judge Garnett’s lead.
Spears Manning & Martini is a full-service litigation firm with extensive trial and appellate experience, including in the areas of securities and commodities trading.