Polymarket has investigated "dozens" of bets placed 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 told NPR.

Prediction markets let users buy and sell contracts tied to real-world outcomes; prices rise and fall with traders' perceived odds, and each contract pays out if the result it tracks comes to pass.

At least two of those investigations have been referred to the Commodity Futures Trading Commission (CFTC), NPR reported, citing a person familiar with the probes.

Bautista said a new surveillance system drawing on campaign finance, cryptocurrency, and banking data has been generating "hundreds of alerts a day" ahead of the November 3 vote.

A 16-person intelligence operation

Bautista, a former FBI official and crypto analyst who joined Polymarket in June, said her team of 16 is policing election bets with the new surveillance system ahead of the vote.

"If you have information that you have a duty to protect, don't trade on it," she 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."

Her team monitors both of the platform's venues: Polymarket's U.S.-regulated exchange, which requires users to verify their identities, and Polymarket International, where users can trade anonymously with cryptocurrency. Even so, Bautista said crypto trades are rarely fully anonymous. "There's never been a case that we work where we haven't been able to identify, potentially, who these people are," she said.

The surveillance system pulls in data from social media, Federal Election Commission filings, crypto companies, banking partners, and statistical models, and flags users who trip enough internal red flags. Bautista declined to share the specific criteria, citing system security.

Manipulation risks in election markets

Election markets are especially vulnerable, Barnard College economics professor Rajiv Sethi told NPR, because they "have the possibility of being a self-fulfilling prophecy," with perceptions of a candidate's momentum able to influence the actual result.

Kalshi, Polymarket's main rival, launched its own 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, saying it had opened more than 150 investigations that year and referred more than 20 cases to law enforcement. Still, one campaign staffer told NPR they had found a way around Kalshi's block.

Insider trading draws scrutiny

Election insider trading on prediction markets drew scrutiny in May, when campaign staffers told NPR they had made "thousands" betting on their own candidates using tips about unreleased polls. "Because you have all this information and knowledge that isn't publicly available yet, it's almost foolish not to bet on it before it's made public," one said.

Jeff Le Riche, a former CFTC trial lawyer, told the outlet that such trades "could potentially be a violation" of the law.

Polymarket partnered with blockchain analytics firm Chainalysis on market surveillance tools in April, 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, who has pleaded not guilty, 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.

Regulatory gap

NPR reported that the CFTC has done little to police prediction markets, largely leaving that work to the companies themselves. That contrasts with securities markets, where regulators actively pursue trading on material non-public information. In September, though, CFTC staff warned that "mention markets"—contracts on whether a named person says certain words or attends an event—should be presumed readily susceptible to manipulation. That advisory came three weeks after the agency fined a teleprompter operator who traded on speeches he had already read.

For now, that setup leaves the platforms' own surveillance—and referrals such as those already before the CFTC—at the center of how election-betting integrity is policed heading into the November 3 vote.