Polymarket is investigating dozens of suspicious midterm election bets, with at least two cases referred to federal regulators, according to an NPR investigation published Oct. 27. The inquiries come as the prediction market’s congressional control contracts show traders favoring a Democratic takeover and as millions of dollars are wagered on individual races ahead of the Nov. 3 elections.
Compliance Team Scrutinizes 506 Markets
Polymarket’s compliance operation is examining potentially improper trading activity across 506 individual election markets. Shana Bautista, the company’s head of global intelligence and investigations, oversees the effort. A former FBI official who joined Polymarket in June, Bautista directs a 16-person team that scrutinizes trading patterns for potential insider dealing and market manipulation.
A person familiar with the investigations said at least two cases were referred to the Commodity Futures Trading Commission (CFTC).
Surveillance System Processes Hundreds of Alerts Daily
Polymarket’s surveillance infrastructure gathers gigabytes of information per user, drawing from social media, Federal Election Commission filings, banking partners, cryptocurrency records, and statistical models. Investigators process hundreds of alerts daily. Suspicious trading activity that crosses internal thresholds triggers notifications directly to Bautista’s phone, allowing the team to examine potentially coordinated transactions.
Warning signs include concentrated trading bursts, multiple accounts exhibiting similar behavior, and shared device identifiers. Investigators also incorporate findings from previous cases into the system to sharpen subsequent detection. The monitoring covers both Polymarket’s identity-verified U.S. exchange and its larger international cryptocurrency platform, where traders can participate without publicly disclosing their identities.
Bautista cautioned that cryptocurrency transactions are not necessarily beyond investigators’ reach. “There’s never been a case that we work where we haven’t been able to identify, potentially, who these people are,” she told NPR.
Democratic Sweep Priced at 65%
Inside Polymarket’s congressional control markets, traders assign Democrats overwhelming odds of capturing the House alongside a narrower advantage in the Senate. The House market has attracted $24 million in trading volume, with Republicans assigned just a 9% chance of retaining control. The Senate market has recorded another $9 million, placing Republican victory odds at 35%.
Polymarket’s balance-of-power contracts price a Democratic sweep of both chambers at 65%, compared with 27% for a Republican Senate and Democratic House. A Republican sweep commands just 8%.
By mid-October, combined midterm-related trading across prediction markets like Polymarket and rival Kalshi had reportedly exceeded $220 million, reflecting substantial interest in the congressional elections.
Senate Battlegrounds Draw Millions
Individual Senate contests are also drawing considerable attention. Texas leads the listed battlegrounds with $7 million in trading volume, as Democrat James Talarico holds a 67% implied probability against Republican Ken Paxton’s 34%. Michigan and Maine follow with $3 million apiece. Abdul El-Sayed leads Mike Rogers 69% to 32% in Michigan, while Troy Jackson holds a 62% to 39% advantage over incumbent Susan Collins in Maine.
Ohio’s Sherrod Brown commands 70% against Jon Husted, while Alaska’s Mary Peltola stands at 75% against Dan Sullivan. Both markets have recorded approximately $2 million in volume. Gubernatorial markets offer another window into trader expectations. California’s Xavier Becerra leads with 97%, Florida’s Byron Donalds commands 80%, and Texas Gov. Greg Abbott holds a 69% implied probability of victory.
Even ballot initiatives attract speculative capital. California’s proposed billionaire wealth tax has generated $4 million in trading volume, with rejection favored at 77%.
Market Integrity Questions Intensify
The expanding marketplace has intensified scrutiny of whether prediction platforms can effectively police political insiders. In April, Kalshi banned and fined political candidates for betting on themselves, and in July, it handed down a lifetime ban to former U.S. Rep. George Santos for trading on his own appearances. Earlier NPR reporting also documented campaign staffers profiting from private polling information. Polymarket has previously referred more than 100 cases involving various markets to law enforcement, extending its investigative activities beyond elections.
Speaking with NPR’s Luke Garrett, economist Rajiv Sethi warned that prediction-market prices can influence fundraising, media narratives, and voter perceptions, particularly when relatively modest trades can move prices in thinly traded contests. Bautista offered a pointed warning to anyone considering exploiting confidential information.
“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.”
With Election Day approaching, Polymarket faces two simultaneous tests. Its traders are pricing the country’s political future, while its investigators are trying to determine whether everyone influencing those prices is playing by the rules.
