Polymarket Pledges to Police Trading for US Midterm Elections

Polymarket’s investigations head is reportedly promising to police trading ahead of this fall’s midterm elections.

In an interview with Reuters published Monday (Aug. 31), Shauna Bautista said the prediction market is working to keep U.S. users away from its international platform.

“I’m confident that I’m able to get the resources and the support I need,” said Bautista, a former FBI investigator and analyst for Coinbase. “I can tell you that we have the ​systems in place to be able to identify anomalous activity when the midterms do come.”

As Reuters noted, Polymarket is facing pressure from lawmakers who worry that rapidly-growing prediction market space could threaten national security or election integrity, whether that means weakening confidence in candidates or sowing doubt about the results of races.

The report added that Polymarket’s ⁠international ⁠platform settles trades on a blockchain, which means that while wagers are public, traders remain anonymous. Critics say that can lead to misconduct, but Bautista said Polymarket’s blockchain nonetheless offers valuable ​information about trader activity.

The six-year-old company said it has been strengthening controls and aims to deliver more transparency around how it polices wagers. It is launching a web page detailing how it protects market integrity and works with law enforcement.

Bautista told Reuters the web page will explain how Polymarket uses machine learning, blockchain analytics, trade surveillance, open source research and third-parties to identify and prevent malicious activity.

“The market ⁠integrity program itself is not new, but what we’re putting on the record now is considerably more ⁠detail about how it operates,” she said.

In other prediction markets news, PYMNTS wrote Monday that a federal appeals court has given state gaming regulators a key victory in their jurisdictional battle with the Commodity Futures Trading Commission (CFTC), finding that Nevada may subject Kalshi’s sports-event contracts to its gambling laws.

The unanimous Ninth U.S. Circuit Court of Appeals decision intensifies a conflict among federal courts about the question of whether sports-related prediction contracts are financial derivatives regulated exclusively by the CFTC or conventional sports wagers governed by state oversight.

The decision also directly conflicts with a ruling in April by the Third Circuit, which said that New Jersey could not regulate Kalshi’s sports contracts. The resulting circuit split has established increasingly favorable conditions for the Supreme Court to settle a dispute that has major implications for prediction markets and the traditional authority of states to police gambling.

“This is a classic circuit split,” Columbia Law School professor Joshua Mitts told CNBC. “Ultimately, this is the kind of legal controversy or legal difference of opinion which will make its way to the Supreme Court.”