Polymarket Investigates Dozens of Midterm Election Bets

Polymarket is scrutinizing dozens of bets placed on the upcoming midterm elections, according to Shana Bautista, the company’s head of global intelligence and investigations. At least two of these probes have been handed over to the U.S. Commodity Futures Trading Commission, the industry’s primary federal regulator, by a source familiar with the internal reviews.

Bautista, a former FBI official who joined Polymarket in June, leads a 16-person team tasked with policing election-related trades. Her group monitors both the U.S.-regulated version of the platform, where users verify their identities, and Polymarket International, a larger entity where trading often occurs anonymously with cryptocurrency. Despite the anonymity of the international version, Bautista stated that her team has not yet encountered a case where they could not potentially identify the traders involved.

The platform relies on a new surveillance system that ingests gigabytes of data from social media, Federal Election Commission records, banking partners, and cryptocurrency firms. When a user triggers a set of internal red flags, the system sends an alert to Bautista’s phone. She reported that the team currently receives hundreds of such alerts daily, though she declined to specify the exact thresholds used to flag suspicious activity.

"If you have information that you have a duty to protect, don't trade on it," Bautista said. She noted that trading on non-public information violates both the platform's terms of use and federal law. Her team looks for patterns similar to those found in traditional markets, such as multiple accounts opening in short bursts or consistent device identifiers across different digital wallets.

The scrutiny comes as prediction markets face growing legal and political pressure. In April, rival Kalshi banned and fined several political candidates for betting on their own campaigns. Shortly after, reports emerged that campaign staffers had generated thousands of dollars by using insider polling data on platforms like Polymarket and PredictIt. Kalshi subsequently launched its own surveillance tool in May, which blocks FEC-listed staffers from trading, though at least one anonymous staffer told NPR they found ways to bypass the restrictions.

Rajiv Sethi, an economics professor at Barnard College, warned that election prediction markets are uniquely vulnerable to manipulation because outcomes can influence the events they predict. If a candidate appears to be losing momentum, that perception can affect voter behavior, creating a self-fulfilling dynamic. The CFTC has largely left the policing of these markets to the platforms themselves, a gap Bautista’s team is working to fill ahead of the November 3 election.

The Polymarket investigation marks a step up in enforcement for the fast-growing industry. As trading volumes increase, the company is applying traditional financial market tactics to detect insider trading and manipulation in this new digital space.