Polymarket Opens Dozens of Inquiries Into Election Betting Ahead of Nov. 3 Midterms

Polymarket has opened investigations into dozens of bets placed on its prediction markets tied to the midterm election, Shana Bautista, the company's head of global intelligence and investigations, said. At least two of those inquiries have been referred to the U.S. Commodity Futures Trading Commission, according to a person familiar with the probes who is not authorized to discuss them publicly.

Bautista, who joined Polymarket in June after working as an FBI official and cryptocurrency analyst, oversees a team of 16. Her group is also running an election surveillance system ahead of the Nov. 3 midterms. "If you have information that you have a duty to protect, don't trade on it," Bautista said. "It's explicitly against our terms of use on both platforms, but also is against the law. If you decide that you are smarter and can do it, we will find you."

The system assembles data on each user from social media, Federal Election Commission records, cryptocurrency companies, banking partners, statistical models and other public sources. When a user crosses a set number of internal red flags, an alert reaches Bautista's phone. "We're getting hundreds of alerts a day," she said. She declined to detail the detection criteria, citing system security.

Bautista oversees both the U.S.-regulated version of Polymarket, which requires users to supply real identities, and Polymarket International, where trading can be anonymous and settled in cryptocurrency. She said crypto trades are rarely fully anonymous: "There's never been a case that we work where we haven't been able to identify, potentially, who these people are."

Kalshi, Polymarket's main rival, announced its own election surveillance system in May that draws on FEC data. The system is designed to block campaign staffers listed by the FEC from betting on an election. In July, Kalshi said it had blocked dozens of staffers from trading on elections. In April, Kalshi banned and fined a small number of political candidates from betting on themselves.

Rajiv Sethi, an economics professor at Barnard College at Columbia University who has studied prediction markets for decades, said election prediction markets carry an unusual risk. "[Election prediction markets] have the possibility of being a self-fulfilling prophecy," Sethi said. "Elections have the property that what one believes is going to happen can actually affect what happens if a candidate is thought to be losing momentum or the campaign is flagging."

The CFTC, the federal regulator for prediction markets, has left much of the policing of these markets to the companies themselves. Bautista said her team builds new detections from cases it has already worked: findings about one tactic feed the process that flags the next one. She said her team's work draws on threats that have existed for decades in traditional markets, applied through prediction markets.