Prediction market Polymarket has said it is ready to police trading on its platform, especially as the U.S. midterm elections draw closer.

 

Confirming its preparedness for the midterm elections, Shana Bautista, Polymarket's global head of investigations and intelligence, told Reuters that the platform is not only ready to surveil midterm trading but is also working to abide by the U.S. Commodity Exchange Act (CEA) of keeping U.S. users off its international platform.

 

"I'm confident that I'm able to get the resources and the support I need," Bautista told Reuters. "I can tell you that we have the systems in place to be able to identify anomalous activity when the midterms do come."

 

By reiterating its preparedness for midterm trading, Bautista helps dispel concerns several U.S. lawmakers have long had about the role prediction markets play in insider trading, which they say threatens national security and undermines election integrity.

 

As part of its surveillance strategy for midterm trading, Polymarket will launch a new web page explaining how it protects market integrity and cooperates with law enforcement.

 

According to Bautista, this webpage outlines how Polymarket uses machine learning, blockchain analytics, trade surveillance, open source research, and third parties to spot malicious trading and insider activity on the platform. 

 

Although this program being integrated is not entirely new, Bautista said Polymarket will provide an in-depth explanation of how it works.

 

Efforts to Curb Insider Trading

 

Polymarket has consistently implemented several measures to curb insider trading and other malicious activities on its platform. Among these measures is its partnership with security firm Chainalysis and Palantir Technologies to implement several multilayered surveillance systems on its platform.

 

It has also actively worked with law enforcement to prosecute traders involved in malicious trading activities. Notable among these was its work with law enforcement in April this year to prosecute Gannon Ken Van Dyke, a U.S. Army Special Forces soldier who was charged with using classified, nonpublic military information to trade on the platform.

 

The U.S. Commodity Futures Trading Commission (CFTC) has fined Gabriel Perez, a former White House teleprompter operator, $172,000 over bets on President Trump’s speeches.

 

In a press release, the CFTC said Perez traded presidential market contracts during his time as a White House teleprompter operator. These contracts are event contracts that reflect words or phrases that the president may use during his speeches.

 

Due to his position at the White House, Perez had direct access to presidential speeches before they were delivered, allowing him to make more than $107,000 in profits between December 2025 and February 2026.

 

According to the CFTC, Perez’s actions constituted a breach of his duty of trust and confidence, leading the agency to impose a civil monetary penalty of $65,000 and order him to disgorge the $107,539.02 in profits he made from the unlawful trading.

 

A three year trading ban was also imposed on him, with the agency stating that Perez agreed to a cease and desist order resolving the violations of the Commodity Exchange Act.

 

Earlier White House Suspension

 

Gabriel Perez was a longtime White House teleprompter operator who had worked with President Trump as far back as 2016, during Trump’s first presidential campaign.

 

However, in March of this year, Kalshi’s surveillance systems flagged unusual trading patterns that did not involve the typical buying and selling behavior of most traders.

 

Upon investigation, Kalshi discovered that the account was owned by a federal White House teleprompter operator, prompting the prediction market to lock the account, which had generated more than $90,000 in profits, and refer the matter to the CFTC along with the evidence it had uncovered.

 

Following the allegations, Perez was placed on unpaid administrative leaaave by the White House. According to White House Press Secretary Karoline Leavitt, the allegations were “deeply unfortunate and frankly a disgrace.”

 

By late July, the White House released a statement saying that Gabriel Perez was no longer working for the federal government.

 

The U.S. Commodity Futures Trading Commission has been making the rounds. CFTC Chairman Michael Selig confirmed this month that his agency is in active talks with all major professional sports leagues in the United States, as regulators scramble to get ahead of potential insider trading problems on prediction markets.

 

"We're talking to all the sports leagues because it's critical that they've got the best information as to what's manipulable in their markets and where the insider trading risks are," Selig said on the Faro Radio podcast. The comments come after months of escalating alarm in Washington over the explosion of prediction market trading tied to sports, politics, and military events.

 

A Market That Grew Too Fast

The numbers tell the story. Monthly trading volume on prediction markets has jumped from around $1.2 billion in early 2025 to over $20 billion by January 2026, according to blockchain research firm TRM Labs. Sports event contracts alone now make up nearly 90% of all bets placed on Kalshi over the past year, according to the Congressional Research Service. That kind of scale, combined with the potential for people with inside knowledge to profit on it, has made regulators nervous.

 

"The biggest issue that comes up is manipulation and insider trading in these markets," Selig told Front Office Sports. And the regulator isn't just talking. In March 2026, the CFTC and Major League Baseball entered into a first-of-its-kind memorandum of understanding, establishing a formal framework for confidential information-sharing between the federal agency and the league. It was a signal that more deals could be coming.

 

Leagues Are Moving, Too

The NHL, MLS, and MLB have all inked prediction market partnerships with Polymarket and Kalshi over the past several months. The NBA is reportedly in active talks with both platforms. The NFL has been the notable holdout, citing integrity concerns, and Selig declined to confirm whether those conversations are ongoing. What is clear is that the agency sees league cooperation as essential. The CFTC has told prediction markets it expects them to share information with leagues about which categories of individuals should be restricted from trading, including players, coaches, referees, trainers, and data partners.

 

The platforms themselves moved to tighten their own rules in March. Kalshi introduced new technological guardrails to block athletes from trading on contracts tied to their own leagues, and politicians from betting on their own races. Polymarket updated its rulebook the same day to prohibit trading on any information that would "violate a preexisting duty or obligation of trust," even when that information was obtained secondhand.

 

The urgency is partly driven by what has already happened in other markets. In April 2026, the CFTC filed its first-ever insider trading complaint involving event contracts, charging an active-duty U.S. Army soldier with using classified intelligence about a military operation in Venezuela to trade Polymarket contracts, generating more than $400,000 in profit. The DOJ has since signaled it will pursue criminal prosecutions for insider trading on prediction markets as well. Jay Clayton, the U.S. Attorney for the Southern District of New York, said in February that his office expects to bring fraud cases tied to prediction market trading.

 

Sports have precedent of their own. The NBA's lifetime ban of Jontay Porter and the federal charges hanging over former Miami Heat guard Terry Rozier both stem from sports betting misconduct. Prediction markets are a different product legally, but the underlying concern, that people with privileged access to information are using it to profit, is exactly the same.

 

Congress Is Watching

Capitol Hill is paying attention, too. A coalition of Democratic lawmakers sent a letter to the CFTC in late April urging the agency to issue a formal rule prohibiting certain types of event contracts and curbing insider trading. The letter, led by Sen. Jeff Merkley of Oregon, described the rapid growth of prediction markets as an "erosion of integrity" that demands regulatory action. Separate legislation has been introduced that would bar government officials from using prediction markets entirely and prohibit event contracts tied to elections, war, and sports.

 

The CFTC, for its part, published an Advanced Notice of Proposed Rulemaking in March seeking public comment on whether to amend regulations governing prediction market event contracts. Selig has framed the issue in stark terms, drawing comparisons to the offshore drift that plagued crypto markets before FTX. "I'm concerned we'll see the same with prediction markets if we keep pushing it offshore into the unregulated space," he said.

 

For now, the talks with sports leagues continue. Whether they translate into formal agreements on the scale of the MLB deal, and how quickly, may determine how effectively the CFTC can police the fastest-growing corner of the derivatives market before the next scandal breaks.

 

Polymarket, the world’s largest prediction market company, has partnered with blockchain analytics firm Chainalysis to help curb insider trading activities amid its recent move to raise $400 million from investors.

 

The partnership will see Chainalysis deploy several investigative tools, including the Chainalysis Data Solutions tool, a first-of-its-kind on-chain solution designed to monitor trading activity on prediction markets while mapping insider trading patterns and enforcing market integrity rules across the Polymarket platform.

 

 

The prediction market platform will also benefit from Chainalysis’s on-chain security capabilities, which are pivotal in preventing threats, as well as a dedicated team of Chainalysis professionals who will not only help deploy Chainalysis Data Solutions but also train the Polymarket team on how to proactively use the solution to maintain transparency on the platform.

 

The solution to be deployed is also dynamic, meaning Polymarket can continually refine its detection methods to identify and curb insider trading activities, thereby maintaining transparency and protecting the platform from emerging threats.

 

By partnering with and leveraging Chainalysis's institutional expertise, Polymarket is clearly signaling its stance against all types of fraud and market manipulation and that those who attempt to engage in any such activities will be promptly identified and prosecuted.

 

"Polymarket was built on chain because transparency matters, and our platform shows what markets can look like when trades are open, traceable, and accountable by design," said Shayne Coplan, Founder and Chief Executive Officer of Polymarket.

 

"Every market deserves that standard. This partnership with Chainalysis pairs that transparency with the monitoring and enforcement infrastructure to back it up and helps us continue to build the most trusted source of truth in markets."

 

Insider Trading Concerns in Prediction Market Platforms 

Insider trading, which is the illegal practice of leveraging material non-public information (MNPI) or confidential information to gain an edge over other market participants, has long been a problem for prediction market platforms.

 

To curb insider trading, the U.S. Senate unanimously passed a measure banning its members from trading on prediction markets. Most recently, a group of congressional Democrats led by Sen. Jeff Merkley has pressed the Commodity Futures Trading Commission (CFTC), urging the regulator to address the lack of integrity caused by insider trading activities on prediction market platforms.

 

Due to this mounting pressure, Kalshi, Polymarket, and other prediction market platforms have rolled out several restrictions to address these concerns, which is also the main factor behind the Polymarket Chainalysis partnership.