Insider Trading Cases Threaten Reckoning for Prediction Markets

Prediction markets have quickly grown from a niche corner of finance to a multibillion-dollar industry with big Wall Street investment, but a growing list of insider trading allegations is bringing concerns about the platforms all the way to the White House.

The most significant development came on Thursday afternoon, when prosecutors announced charges against Gannon Ken Van Dyke, a US soldier who allegedly took advantage of classified intelligence to win more than $400,000 betting on the capture of Nicolás Maduro in Venezuela.

Nicolas Maduro arrives at the Wall Street heliport ahead of his appearance in federal court in New York in January.

Photographer: Michael Nagle/Bloomberg

The indictment came not long after French authorities said that they were probing whether someone had tampered ...