Polymarket Probed 'Dozens' of Election Bets, Referred Two to CFTC

Polymarket has investigated "dozens" of midterm election bets for possible insider trading and manipulation, and has referred at least two cases to the Commodity Futures Trading Commission, according to NPR interviews with the company's investigations chief and a person familiar with the probes.

The disclosure comes from Shana Bautista, Polymarket's head of global intelligence and investigations, who told NPR her 16-person team now runs a surveillance system generating "hundreds of alerts a day" ahead of the November 3 vote. Bautista is a former FBI official and crypto analyst who joined the company in June.

Her warning to would-be cheaters was blunt. "If you have information that you have a duty to protect, don't trade on it," she 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."

How the surveillance system works

The team polices two distinct venues. One is Polymarket's U.S.-regulated exchange, where users must verify their identities. The other is Polymarket International, where users can trade anonymously with crypto.

That anonymity, Bautista suggested, is thinner than traders might assume. "There's never been a case that we work where we haven't been able to identify, potentially, who these people are," she said.

The system pulls data from several streams:

• social media
• Federal Election Commission filings
• crypto companies
• banking partners
• statistical models

When a user trips enough internal red flags, the system alerts Bautista's team. She declined to describe the specific criteria, citing system security.

Why election markets attract insiders

Election markets carry a unique structural risk. Barnard College economics professor Rajiv Sethi told NPR the contracts "have the possibility of being a self-fulfilling prophecy," because perceptions of a candidate's momentum can shape the outcome itself.

The scrutiny is not hypothetical. In May, campaign staffers told NPR they had made "thousands" betting on their own candidates using tips about unreleased polls. "Because you have all this information and knowledge that isn't publicly available yet, it's almost foolish not to bet on it before it's made public," one staffer said. Jeff Le Riche, a former CFTC trial lawyer, told the outlet such trades "could potentially be a violation" of the law.

What about the regulators and rivals?

NPR reported that the CFTC has done little to police prediction markets directly, leaving most enforcement work to the companies themselves. The agency has moved on narrow fronts. In September, CFTC staff warned that "mention markets" — contracts on whether a named person says certain words or attends an event — should be presumed readily susceptible to manipulation. That advisory landed three weeks after the agency fined a teleprompter operator who traded on speeches he had already read.

Kalshi, Polymarket's main rival, launched an FEC-based system in May to block campaign staffers from betting on elections. In June, it added employment disclosures for high-risk markets and a risk-scoring framework, saying it had opened more than 150 investigations that year and referred more than 20 cases to law enforcement. Even so, one campaign staffer told NPR they had found a way around Kalshi's block.

Polymarket also partnered with blockchain analytics firm Chainalysis on surveillance tooling in April. That deal came days after an active-duty U.S. Army soldier was charged with using classified information about the raid to capture Nicolás Maduro to bet on the platform. The soldier, who has pleaded not guilty, allegedly placed more than $33,000 in bets and won nearly $410,000. Polymarket said it detected the activity and reported it to authorities before the arrest.

What does this change before November 3?

For traders, the practical takeaway is simple: self-policing is now operational, staffed and data-fed, on both the regulated and offshore venues. The two CFTC referrals show the pipeline from internal alert to regulator is live. Expect the number of referrals and the CFTC's posture toward election contracts to come into sharper focus as the November 3 vote approaches.