At a glance

  • Polymarket has opened “dozens” of inquiries into midterm trading on its platform, looking for insider dealing and manipulation, Shana Bautista, who runs its intelligence and investigations unit, told NPR.
  • A person familiar with the probes, not authorised to speak publicly, told NPR that at least two had gone to the Commodity Futures Trading Commission (CFTC), the platform’s federal regulator.
  • Bautista said a new surveillance system produces “hundreds of alerts a day” in the run-up to the 3 Nov vote.

Election markets have never been bigger. Neither has the worry that some traders know the result of a poll before everyone else.

Put simply, insider trading here means betting on a race using information you were trusted to keep private, such as a campaign’s unreleased internal polling.

What Polymarket says it is doing

Bautista spent time at the FBI and as a crypto analyst before joining in June. She told NPR her 16-person team covers both the US-regulated Polymarket exchange, which requires users to verify their identity, and Polymarket International, where trading can be done anonymously with crypto.

Her message to insiders was blunt: anyone holding information they are duty-bound to protect should not trade on it, she said, adding, “we will find you.”

According to NPR, the tool combines Federal Election Commission records, social media, data from banks and crypto firms, and statistical models, and alerts her once an account hits enough internal warning signs. She declined to give the thresholds, citing system security, and said crypto trades are rarely fully anonymous.

Kalshi faces the same problem

Kalshi, the main rival, launched its own FEC-based block on campaign staffers in May, according to NPR. One staffer told the broadcaster they had found a way around it. In June, Kalshi put its own count for the year at over 150 inquiries and over 20 cases passed to law enforcement, according to Decrypt.

CryptoWatchDesk covered a smaller case in October, when Kalshi probed three small bets placed before Trump’s press secretary pick.

Election contracts carry a special risk, Barnard College economist Rajiv Sethi told NPR: the odds can feed back into the race itself, because a campaign that looks to be fading can start to fade.

The regulator’s role

In NPR’s assessment, the CFTC has mostly left the policing of these markets to the operators themselves. Its rulebook is still in draft: we covered the CFTC’s proposal on event contracts earlier this month.

Meanwhile the industry keeps signing mainstream partners. On Monday the NBA named Kalshi and Polymarket its preferred prediction markets, and S&P Dow Jones Indices picked Kalshi for index event contracts.

What to watch

  • Whether the CFTC confirms or acts on any referral from Polymarket.
  • Whether Polymarket publishes case numbers after 3 Nov, as Kalshi has done.
  • State and congressional pressure on election contracts once the votes are counted.

Related: The CFTC's lawsuit against Utah over its Kalshi case

This article is for information only and is not investment advice.