Polymarket probes election bets

Prediction markets have become a major venue for wagering on U.S. political outcomes, but the industry now faces increased scrutiny from both regulators and its own internal security teams.

Shana Bautista, who heads global intelligence and investigations at Polymarket, stated that the company has investigated dozens of election-related cases. At least two of these probes have been referred to the Commodity Futures Trading Commission, according to a person familiar with the matters who is not authorized to speak publicly.

Bautista, a former FBI official who joined Polymarket in June, leads a team of 16 employees. They are actively monitoring transactions ahead of the midterms on November 3. The team oversees both the U.S.-regulated version of the platform, which requires real identities, and Polymarket International, a largely unregulated arm where users can trade anonymously with cryptocurrency.

Despite the anonymity of crypto trades, Bautista said her team has always been able to identify potential suspects. A new surveillance system pulls gigabytes of data per user from social media, Federal Election Commission records, banking partners, and statistical models. The system generates hundreds of alerts per day for the team to review.

When a user triggers internally defined red flags, Bautista receives a direct alert on her phone. She declined to specify the exact detection thresholds for security reasons but noted that insider trading patterns in prediction markets mirror those in traditional financial markets. The team looks for specific threat vectors that have existed in finance for decades.

Bautista warned users that trading on protected information violates both platform terms and the law. She said if a trader believes they can outsmart the system, the company will find them. The team analyzes patterns such as multiple accounts opening in short bursts with consistent device IDs and new wallets.

Competitor Kalshi implemented a similar surveillance system in May that blocks campaign staffers listed by the FEC from betting on elections. Kalshi reported blocking dozens of staffers in July, though one anonymous staffer told NPR they found ways to bypass the controls.

Rajiv Sethi, an economics professor at Barnard College who has studied prediction markets for decades, noted that these markets are uniquely vulnerable to manipulation. He explained that election outcomes can become self-fulfilling prophecies if a candidate is perceived as losing momentum, which can actually affect the race.