Polymarket Probes Midterm Election Wagers

Voters in Dallas County face a new layer of scrutiny on the platforms where they track election odds. Polymarket is investigating dozens of bets tied to the November 3 midterms, according to Shana Bautista, the company’s head of global intelligence and investigations. The probes target suspected insider trading and market manipulation as the platform’s user base grows rapidly.

A person familiar with the internal reviews said at least two cases have been sent to the U.S. Commodity Futures Trading Commission. The CFTC regulates the platform but has largely left day-to-day policing to the companies themselves over the past two years. This gap in oversight has raised questions about how effectively the market is being monitored.

Bautista joined Polymarket in June after a career as an FBI official and cryptocurrency analyst. She leads a team of 16 that uses a new surveillance system to watch trades. The system collects data from social media, Federal Election Commission records, banking partners, and statistical models. Her phone receives hundreds of alerts daily when users trigger specific red flags.

"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." She noted that crypto trades are rarely fully anonymous despite the use of digital currencies.

The company’s rivals face similar scrutiny. Kalshi, the main competitor, banned and fined several political candidates in April after they bet on their own races. In May, Kalshi launched a surveillance system that blocks campaign staffers listed by the FEC from wagering. The company said in July that it had blocked dozens of staffers, though one reported finding a way around the restriction.

Concerns about insiders are not new. In May, a report found that campaign staffers had made thousands of dollars using insider polling information. They wagered on their own candidates on platforms including Polymarket and PredictIt. These early incidents set the stage for the current wave of investigations.

Rajiv Sethi, an economics professor at Barnard College, said election markets are uniquely vulnerable to manipulation. He warned that these markets can become a self-fulfilling prophecy. Perceptions of a candidate losing momentum can influence actual results, creating a feedback loop that traditional markets do not experience.

Bautista said her team studies past cases to identify new tactics. They feed these insights back into their detection tools to stay ahead of manipulators. The surveillance covers both the U.S.-regulated version of Polymarket, which requires identity verification, and Polymarket International, which allows anonymous trading with cryptocurrency.

The legal environment remains unsettled. States have launched legal challenges against the industry, and lawmakers argue that betting on election outcomes poses risks to democracy. Polymarket and Kalshi have continued to expand despite these pressures, betting that their internal controls are sufficient to maintain market integrity.