Polymarket Monitors Midterm Election Bets

Prediction market Polymarket has examined dozens of wagers tied to the upcoming midterm elections. Shana Bautista, the company's head of global intelligence and investigations, said her team and a new surveillance system are monitoring trading ahead of the Nov. 3 midterms.

At least two of the company's election-related probes have been passed to the U.S. Commodity Futures Trading Commission, according to a person familiar with the investigations who was not authorized to discuss them publicly. The company's team investigating these matters includes 16 people. Polymarket's surveillance system collects data on users from sources including social media, Federal Election Commission records, cryptocurrency companies, banking partners, and statistical models. Bautista said the system generates hundreds of alerts daily.

Bautista, a former FBI official and cryptocurrency analyst, joined the company in June. She oversees data from the U.S.-regulated version of Polymarket, which requires real identities, and Polymarket International, which permits anonymous cryptocurrency trading. She said her team can identify users in every case they have worked. "There's never been a case that we work where we haven't been able to identify, potentially, who these people are," Bautista said.

Trading on inside information is prohibited under Polymarket's rules. Bautista warned users who hold protected information: "If you decide that you are smarter and can do it, we will find you." She declined to disclose specific detection thresholds, citing system security.

Polymarket's main competitor, Kalshi, launched its own election surveillance system in May. That system uses Federal Election Commission data to block campaign staffers listed by the agency from betting on elections. Kalshi said in July it had blocked dozens of staffers from trading on elections.

Prediction markets for elections face specific risks, according to Rajiv Sethi, an economics professor at Barnard College at Columbia University who has studied these markets for decades. "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," Sethi said.

Bautista said her system learns from past cases and identifies patterns used by traders attempting to move a market, such as opening multiple accounts in short succession with consistent device identifiers. The U.S. Commodity Futures Trading Commission is the federal regulator for these markets, but the agency has left most policing work to the companies themselves.