Polymarket investigates dozens of election bets

Polymarket has opened investigations into dozens of election-related bets on its prediction markets, according to company leadership. The probes focus on insider trading and market manipulation as the industry prepares for the November 3 midterm election.

Shana Bautista, who joined Polymarket in June to lead its global intelligence and investigations division, stated that her 16-person team is actively policing these transactions. At least two of the current investigations have been referred to the U.S. Commodity Futures Trading Commission, the platform's federal regulator. One person familiar with the probes confirmed this but noted they were not authorized to speak publicly about the details.

Bautista, a former FBI official, oversees data from both the U.S.-regulated version of the platform and Polymarket International. The international version allows anonymous trading with cryptocurrency, though Bautista said her team can usually identify users through a network of data sources. These sources include social media, Federal Election Commission records, banking partners, and cryptocurrency companies.

The company uses an automated surveillance system that processes gigabytes of data per user. The system flags potential issues based on internally defined criteria. Bautista reported that the team receives hundreds of alerts daily. When specific red flags are triggered, the system sends an alert directly to her phone. She declined to share the exact thresholds, citing system security.

Bautista emphasized that users with protected information should not trade on it. She noted that this rule is part of the platform's terms of use and is also required by law. "If you decide that you are smarter and can do it, we will find you," she said. Her team looks for patterns such as multiple accounts, short bursts of trading, and consistent device IDs across new wallets.

The platform's rival, Kalshi, launched its own election surveillance system in May. That system blocks campaign staffers listed by the Federal Election Commission from betting on elections. In July, Kalshi reported that it had blocked dozens of staffers from trading. However, at least one staffer told NPR that they successfully bypassed the block. That staffer shared trade records on the condition of anonymity to protect their future employment.

Rajiv Sethi, an economics professor at Barnard College, warned that election markets are vulnerable to manipulation. He explained that beliefs about election outcomes can influence actual results if candidates appear to be losing momentum. Polymarket's team is using past cases to refine their detection methods and anticipate the tactics of would-be insiders.