Polymarket says its investigating election market insider bets

Oct. 27 (UPI) -- Prediction market company Polymarket said it has investigated bets related to the upcoming midterm elections, said Shana Bautista, head of Global Intelligence & Investigations at Polymarket.

"We build detections around how someone would actually try to manipulate an election market and what that activity would leave behind," Bautista said in a statement. "Our team brings years of experience tracing funds and investigating sophisticated networks. We connect the evidence, evaluate legitimate explanations and document the basis for our decisions."

In April, Polymarket competitor Kalshi banned and fined three political candidates from betting on themselves.

Prediction markets have become increasingly popular, and regulators and lawmakers are scrambling to enact laws to control them.

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

"We're looking at threat vectors and risk areas that have existed for decades in traditional markets," Bautista said. "But we recognize, too, that when it comes to prediction markets, we're seeing some of the old tried and known tactics, but being applied to a new vector through prediction markets."

"[Election prediction markets] have the possibility of being a self-fulfilling prophecy," Sethi said. "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 or the campaign is flagging."

Bautista, who worked at the FBI before Polymarket, said case findings aid future investigations.

"If I was worried about somebody trying to materially move an election market to make it look like one option was more likely to happen than the other, and I identify a pattern where they're opening several different accounts and they're doing that in short bursts, and I see device IDs consistent across different trades placed in short succession with new wallets across five or four different accounts," Bautista said. "If I were to work that case and then action that, the findings of that tactic go back into the process to create the detections."