Polymarket says surveillance is ready for US midterms

Polymarket says its trade surveillance systems are ready for the US midterm elections on November 3, as lawmakers press prediction markets on insider trading and election integrity.

Shana Bautista, the platform’s global head of investigations and intelligence, told Reuters the company can track suspicious activity across its election markets in the run-up to the vote. Bautista joined Polymarket from Coinbase, where she worked as an analyst, and previously worked as an investigator at the Federal Bureau of Investigation (FBI).

“We have the systems in place to identify anomalous activity when the midterms do come.”

She also said she had what she needed to run the function: “I’m confident that I have the resources and support needed.”

What the monitoring stack covers

Polymarket detects misconduct using machine learning, blockchain analytics, trade surveillance and open-source research, supported by third-party partnerships. The company plans to publish a webpage setting out those market integrity controls in detail.

The platform settles trades on a public blockchain, so every position and price movement is visible while the identity of the trader is not. Critics say that anonymity makes manipulation easier to hide. Polymarket says the public ledger gives investigators a permanent record of every trade that a conventional order book does not expose.

“It is difficult at scale to consistently evade all guardrails we have.”

More than 100 referrals to law enforcement

Polymarket says it has referred over 100 cases to law enforcement. Two of them involve US national security. One concerns a wallet linked to a US soldier accused of using classified information to trade a market on the capture of Venezuelan President Nicolás Maduro. Another involves suspected insider bets placed around US military operations in Iran.

Those referrals are the company’s main answer to members of Congress who argue that event contracts on political outcomes create an incentive to trade on non-public information, including information held by people who can influence the outcome.

The 2022 CFTC settlement still frames the questions

In 2022 the Commodity Futures Trading Commission (CFTC) fined Polymarket for offering event contracts without registering with the regulator, and required the company to bar US users from its international platform. Analysts have since pointed to evidence that US residents continued to trade there. Bautista said she is confident the company’s controls keep out the vast majority of US users.

Federal regulators dropped an investigation into whether Polymarket breached that settlement after the change of administration in Washington. The company then re-entered the US market in 2025 by acquiring a CFTC-registered exchange, giving it a licensed route to American customers for the first time since the settlement.

That history matters for the midterms because it sets the standard Polymarket will be measured against. The company is now a registered US market operator rather than an offshore platform, which places its election contracts inside the CFTC’s supervisory perimeter rather than outside it.

Prediction markets sit outside state gambling regulators

Event contracts are overseen by the CFTC as derivatives, not by state gambling regulators, which is what separates prediction markets from the licensed US sportsbook industry. That industry continues to expand state by state, with bet365 entering West Virginia as its 18th US state in August, and the leagues themselves now hold commercial agreements with operators, including the NFL’s betting deals with DraftKings, FanDuel and Fanatics.

The regulatory split explains why political markets are available on prediction platforms at all. State gambling laws generally prohibit betting on elections. Federally regulated event contracts are not covered by those prohibitions, which is why the argument over Polymarket’s election markets is being conducted in Congress and at the CFTC rather than in state legislatures.

What happens before November 3

Polymarket’s election markets will carry more volume and more scrutiny than any it has run as a US-registered operator. The integrity webpage is not yet live, the CFTC has not set out how it will supervise political event contracts during a federal election, and lawmakers who want prediction markets restricted have a two-month window to act before voting begins. What Polymarket’s surveillance actually catches, and what it refers, will be the record both sides use.

Source: Polymarket