Polymarket Just Admitted It's Investigating "Dozens" of Election Bets—And It's Already Turned Some of You In

 Polymarket Just Admitted It's Investigating "Dozens" of Election Bets—And It's Already Turned Some of You In

**By [moonlight editory team] | October 27, 2026 | 11-Minute Read**

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## The Short Version (For the Busy American)

One week before the midterms, the biggest prediction market in the world just confirmed your worst suspicion: **people are trying to cheat the system, and Polymarket knows who some of them are.**

The company's head of global intelligence and investigations, **Shana Bautista**, told NPR that Polymarket has investigated **"dozens" of election-related cases** for potential insider trading and market manipulation. **At least two of those investigations have been referred to the Commodity Futures Trading Commission (CFTC)**, the federal regulator that oversees the platform .

The timing is brutal. Polymarket's market on **which party controls the House** has already seen **$23.94 million in cumulative trading volume**, with prices implying a **91.5% chance of Democratic control** . That's real money moving on real election outcomes—and some of it may be moving on information that isn't supposed to be public.

**The punchline:** Polymarket built a surveillance system that generates **"hundreds of alerts a day."** It's staffed by a 16-person team. And its message to anyone thinking about trading on inside information is simple: **"We will find you"** .

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## What Polymarket Is Actually Doing

Let me break down the operation, because the scale of this surveillance is remarkable.

### The Team

Bautista joined Polymarket in June. She's a former FBI official and cryptocurrency analyst. She oversees information from **both** the U.S.-regulated Polymarket—which requires users to provide real identities—**and** Polymarket International, the essentially unregulated version where trading can be done anonymously and with cryptocurrency .

Her team of 16 is policing election bets ahead of the November 3 midterms.

### The Surveillance System

Polymarket's system pulls in **"gigabytes" of data on each user** from:

- Social media

- Federal Election Commission (FEC) data

- Cryptocurrency companies

- Banking partners

- Statistical models

- Other public information sources 

If a user hits a certain number of internally-defined red flags, Bautista gets an alert on her phone. **"We're getting hundreds of alerts a day,"** she said .

### The Message to Insiders

Bautista didn't mince words when describing the rules: **"If you have information that you have a duty to protect, don't trade on it. 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 also pushed back on the idea that crypto trading provides anonymity: **"There's never been a case that we work where we haven't been able to identify, potentially, who these people are"** .

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## The Human Touch: Why This Matters Beyond the Betting Crowd

Let me put this in terms that actually connect to your life, because this isn't just about gamblers.

### The Democracy Problem

Election prediction markets aren't just a financial curiosity. They're a new front in the information war.

When Polymarket and Kalshi publish odds that show a candidate has a 90% chance of winning, **voters see that number**. Some may decide it's not worth voting because the outcome seems predetermined. Others may see the odds and conclude that if their candidate loses, it must be fraud—because the market "predicted" otherwise .

Rajiv Sethi, an economics professor at Barnard College who has studied prediction markets for decades, put it bluntly: **"Election prediction markets have the possibility of being a self-fulfilling prophecy. 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"** .

The 2020 and 2022 elections showed how quickly false fraud claims can spread. Now imagine those claims backed by **live financial odds** that show one outcome as "certain"—and the other as "impossible."

### The Insider Trading Problem

Here's the uncomfortable reality. Campaign staffers, poll workers, and political operatives have **access to information that isn't public**. They know how a race is really going. They see internal polls. They hear the conversations.

If they can bet on that information anonymously—or think they can—the market stops reflecting genuine public sentiment and starts reflecting **stolen information**.

NPR reported in May that campaign staffers had made **"thousands"** using insider polling information to bet on their own candidates on platforms like Polymarket and PredictIt . Kalshi banned and fined some political candidates for betting on themselves. It blocked **"dozens" of staffers"** from trading on elections .

But at least one staffer told NPR they **got around** Kalshi's block. They shared records of their trades. They spoke anonymously for fear of consequences .

That's the cat-and-mouse game Polymarket is now playing.

### The Regulatory Vacuum

Here's the part that should make you angry. The CFTC—the federal agency that regulates Polymarket—has done **"little to police these new financial markets, largely leaving that work to the companies themselves"** .

That's right. The federal regulator is letting the industry police itself.

The CFTC currently has **only one commissioner**, Michael Selig, appointed by President Trump. He's taken a favorable stance toward prediction markets. In June, the CFTC proposed a rule that would set up a framework for event contracts that **continues to allow trading on elections** .

Meanwhile, states are fighting back. **Twenty-three states completely ban election betting** . Minnesota passed a near-total ban on prediction markets. Maryland's elections administrator has asked the state to investigate whether election betting is legal. Arizona filed criminal charges against Kalshi .

The result is a **patchwork of conflicting rules**—and a federal regulator that's siding with the industry.

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## Frequently Asked Questions

### What exactly is Polymarket investigating?

**"Dozens" of election-related bets** for potential insider trading and market manipulation. At least **two cases** have been referred to the CFTC, according to a person familiar with the probes .

### What is insider trading on a prediction market?

It's when someone with **non-public information**—like a campaign staffer who knows internal polling numbers, or a poll worker who sees early voting data—uses that information to place bets on Polymarket. It's against the platform's terms of use and against the law .

### How does Polymarket detect cheating?

Its surveillance system pulls data from **social media, FEC records, crypto companies, banking partners, and statistical models**. It generates **"hundreds of alerts a day."** Bautista's team of 16 reviews the alerts and investigates the most serious ones .

### Did Polymarket actually refer cases to the CFTC?

**Yes.** At least **two investigations** have been referred to the Commodity Futures Trading Commission, according to a source who spoke to NPR on condition of anonymity because they weren't authorized to discuss the probes .

### Who is Shana Bautista?

She's Polymarket's **head of global intelligence and investigations**. She's a former FBI official and cryptocurrency analyst. She joined Polymarket in June and oversees the company's election surveillance efforts on both the U.S. and international platforms .

### What does Kalshi say about this?

Kalshi, Polymarket's main competitor, has its own election surveillance system that uses FEC data. It blocked **"dozens" of campaign staffers** from trading on elections. But at least one staffer told NPR they found a way around the block .

### Is election betting legal?

**It depends on where you are.** Twenty-three states completely ban election betting. The federal government, through the CFTC, has asserted authority to regulate prediction markets—and the CFTC's current leadership has allowed election contracts to continue. States are challenging that authority in court .

### What is the CFTC doing about all this?

**Not much.** NPR reported that the CFTC has "done little to police these new financial markets, largely leaving that work to the companies themselves." The agency's sole commissioner, Michael Selig, has taken a favorable stance toward prediction markets .

### What is the concern about election misinformation?

When prediction markets publish odds showing one candidate as a heavy favorite, and the actual result differs, **people may claim fraud**. This happened in the June Los Angeles mayoral primary, when right-wing influencers pointed to prediction market odds as evidence of fraud after their preferred candidate lost .

### What should I watch next?

Three things: **(1) The CFTC's response to the two referrals**—will it investigate or let them slide? **(2) Any enforcement actions against specific users**—bans, fines, or referrals for prosecution. **(3) The midterm results**—if prediction market favorites lose, will there be a misinformation surge?

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## The Path Forward: What to Watch

### The CFTC's Response

The two referrals to the CFTC are the test case. If the agency investigates and takes action, it signals that insider trading on prediction markets will be policed. If it does nothing, it signals that the industry is on its own—and that the rules are whatever Polymarket says they are.

### The Election Day Test

November 3 is the biggest test Polymarket has ever faced. If the market's favorites win, the platform's credibility is enhanced. If they lose—and especially if the losses are unexpected—the misinformation machine could kick into overdrive.

### The State Battles

Arizona filed criminal charges against Kalshi. Minnesota banned prediction markets entirely. Other states are watching. If a state wins a major legal victory against a prediction market, the industry's expansion could be halted.

### The Legislation

Rep. Jamie Raskin and Sen. Jeff Merkley introduced a bill to **ban prediction market trading on elections, sports, acts of war, and other government actions** . It hasn't passed, but it signals that Congress is paying attention.

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## Conclusion: The House Always Wins—Unless It Gets Caught

Here's what I want you to take away from Polymarket's investigation.

Prediction markets were supposed to be a **better way to forecast elections**—a market-based alternative to polls that would aggregate information more efficiently and more honestly.

Instead, they've become a **new vector for insider trading, manipulation, and misinformation**. The people with the most information have the most incentive to cheat. The companies that run the markets have the most incentive to look the other way. And the federal regulator has decided that self-policing is good enough.

Polymarket is investigating dozens of cases. It's referred two to the CFTC. It's generating hundreds of alerts a day. That's more than nothing—but it's not the same as accountability.

If you're betting on elections, know this: **they're watching**. If you're not betting, know this: **the odds you see may not be as honest as they look**.

And if you're a voter, know this: **the number on Polymarket is not a prophecy**. It's a market. And markets can be wrong.

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## Disclaimer

This article is for informational purposes only and does not constitute financial advice, investment advice, or legal advice. The author is not a licensed financial advisor or attorney. All investments involve risk, including the potential loss of principal. Betting on prediction markets involves additional legal and regulatory risks that vary by jurisdiction. Readers should consult with a qualified professional regarding their specific situation.

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