1. What is Polymarket doing about insider trading?
Polymarket has investigated dozens of bets on its midterm election markets for possible insider trading and manipulation, according to Shana Bautista, the company's head of global intelligence and investigations, who spoke to NPR in an interview reported on October 27. At least two of those cases were referred to the Commodity Futures Trading Commission (CFTC), an unnamed person familiar with the probes told the broadcaster.
Bautista is a former FBI official and crypto analyst who joined Polymarket in June. Her team of 16 is watching election-related bets with a new surveillance system ahead of the November 3 vote. She warned that trading on information a person has a duty to protect violates both the platform's terms and the law, and said the company will find those who try.
Insider trading on prediction markets has become a prominent concern as these venues grow. A prediction market lets users buy and sell contracts whose value depends on the outcome of a future event, such as an election. When someone holds non-public knowledge about that outcome, they can profit at the expense of other traders, and the prices that the market produces become less reliable as a forecast.
The company's message arrives at a sensitive moment. Prediction markets have drawn rising trading volumes around political events, and their forecasts are increasingly quoted in public discussion. That visibility raises the cost of any manipulation, because a distorted price can shape how voters and commentators read the state of a race. Establishing that the platforms can detect and deter abuse is therefore central to their claim to be credible sources of information.
The disclosure of dozens of investigations also serves as a signal to would-be rule-breakers. By stating publicly that cases have already gone to the CFTC, the company is indicating that the consequences of detection could extend beyond losing access to the platform and could include scrutiny from federal authorities.
2. How does the surveillance system work?
The system draws on social media, Federal Election Commission (FEC) filings, crypto firms, banking partners and statistical models. It alerts Bautista when a user trips enough red flags, and it produces hundreds of alerts a day. Most alerts presumably prove harmless, which is why a human investigator is needed to decide which deserve a closer look.
Bautista declined to share the specific criteria the system uses, citing the need to protect its security. Keeping the triggers confidential is a standard approach in surveillance, because a person who knows what the monitor looks for can arrange trades to avoid it.
The mix of data sources is notable. FEC filings can reveal who works for campaigns or committees, which helps identify traders with a possible connection to a candidate. Social media can show relationships or public statements, while banking partners and crypto firms can help link a trading account to a real identity. Statistical models can then highlight activity that deviates from normal patterns, such as unusually timed or sized wagers.
Hundreds of daily alerts also illustrate the scale of the task. A surveillance system that flags too little misses misconduct, while one that flags too much overwhelms investigators. A team of 16 must therefore rely on the models to rank the alerts so that the most suspicious activity receives attention first.
3. Can traders on Polymarket stay anonymous?
Not entirely, Bautista said. Polymarket operates two distinct venues. Its U.S.-regulated exchange requires identity verification, while Polymarket International allows anonymous crypto trading. The difference means that the information available to investigators varies with the platform on which a suspicious bet was placed.
Bautista said crypto trades are rarely fully anonymous. Blockchain transactions are recorded publicly, and the points where funds enter or leave the system, such as exchanges and banks, often hold identifying information. According to her, her team has never failed to identify the people potentially behind suspicious trades.
That claim comes from the company's own investigator, and the interview does not provide independent figures on how often identifications succeed or lead to penalties. It does, however, show the stance Polymarket wants to project: that its venues are not safe havens for anyone hoping to trade on confidential information.
The existence of two separate venues complicates oversight for regulators and users alike. A trader who is verified on the U.S. exchange is subject to a different set of checks than one using the international platform, yet both fall under the surveillance team's remit, according to the description of its work. How the findings from each venue are combined has not been detailed.
4. Why are election markets considered vulnerable?
Rajiv Sethi, an economics professor at Barnard College, told NPR that election markets are especially vulnerable because they can become self-fulfilling prophecies. If prices suggest a candidate has momentum, that perception may influence voters, donors or media coverage, which could in turn affect the real outcome the market is meant to predict.
Insider activity adds a second layer of concern. Campaign staff, pollsters and others who see unreleased data hold information that could move a contract before the public learns of it. Their trades could both enrich them and send misleading signals to everyone else watching the market.
The issue is not hypothetical. In May, campaign staffers told NPR they had made thousands of dollars' worth of bets on their own candidates using tips about unreleased polls. One of them argued that it was almost foolish not to bet on non-public information. Jeff Le Riche, a former CFTC trial lawyer, said such trades could potentially violate the law.
The comments also point to a conceptual difficulty. Markets are valued for aggregating dispersed knowledge, and informed traders are part of how prices become accurate. The question regulators and platforms must answer is where legitimate informed trading ends and the misuse of confidential or duty-bound information begins. Bautista's statement ties the line to information that a person has a duty to protect.
5. How does Kalshi compare?
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. It reported opening more than 150 investigations that year and referring more than 20 cases to law enforcement.
The measures show that both leading platforms are building compliance functions that resemble those of traditional trading venues. Yet no system is airtight. A campaign staffer told NPR they had found a way around Kalshi's block, a reminder that rules based on declared affiliations can be circumvented by someone determined to do so.
The figures reported by Kalshi, which include more than 150 investigations and more than 20 referrals to law enforcement, give a benchmark for the scale of activity across the industry. Polymarket has described its caseload as dozens of investigations, with at least two referrals to the CFTC, so the two companies' reported numbers differ, and they are not necessarily measured in the same way.
6. What earlier cases led to this push?
In April, Polymarket partnered with the blockchain analytics firm Chainalysis on market surveillance tools. The announcement 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 Polymarket. The soldier pleaded not guilty. He 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. The case is among the most striking examples of alleged misuse of confidential government information on a prediction market, and it helped push the topic of market integrity to the forefront.
Together with the election-related probes, it illustrates how the company has moved from a lightly policed start-up product toward one that builds an investigations team, employs former law enforcement staff and cooperates with federal authorities.
The Chainalysis partnership shows another approach to the problem. Blockchain analytics tools trace the movement of funds across addresses and can help connect accounts that appear unrelated. For a platform where many trades are settled in crypto, such tools are a natural complement to traditional compliance methods.
7. What is the CFTC's role?
NPR reported that the CFTC has done little to police prediction markets, leaving enforcement largely to the companies themselves. The agency is the federal regulator for derivatives, and event contracts of this kind fall within its oversight. The company-led model puts a lot of weight on the diligence of private compliance teams.
There are signs of more attention from the regulator. In September, CFTC staff warned that mention markets, which are contracts tied to whether a named person says certain words or attends an event, should be presumed readily susceptible to manipulation. Three weeks before that advisory, the agency fined a teleprompter operator who traded on speeches he had already read.
With the November 3 vote approaching, scrutiny of election-related trading is likely to intensify. The referrals to the CFTC suggest that Polymarket's findings may produce federal action, though the agency has not announced any outcome from the two cases mentioned. Observers will be watching whether the volume of alerts, investigations and referrals reported by both Polymarket and Kalshi translates into enforcement that deters misuse.
The teleprompter operator case shows that the agency is willing to act against small-scale misuse of confidential information in event-related trading, even if its broader oversight has been limited. It also provides a precedent for the type of conduct regulators consider improper, namely trading on knowledge gained through a job that gives access to unreleased material.