Calls are increasing inside Congress for investigations into the prediction market platform Polymarket after the latest instance where groups of anonymous traders made strategic, well-timed bets on a major geopolitical event hours before it occurred.
On Wednesday, The Associated Press reported that at least 50 brand new accounts on Polymarket placed substantial bets on a U.S.-Iran ceasefire in the hours, even minutes, before President Donald Trump announced the ceasefire late Tuesday on social media. These were the sole bets made on Polymarket through these accounts.
In January, an anonymous Polymarket user made a $400,000 profit by betting that Venezuelan leader Nicolas Maduro would be out of office, hours before Maduro was captured. In the hours before the start of the Iran war, another account made roughly $550,000 in a series of trades effectively betting that the U.S. would strike Iran and that Ayatollah Ali Khamenei would be removed from office.
Such prescient wagers have raised eyebrows — and accusations that prediction markets are ripe for insider trading. And the issue goes beyond these three geopolitical events, according to at least one report. Researchers at Harvard University released a paper last month where, using public blockchain data, they estimated that $143 million in profits have been made on Polymarket by individuals who potentially had insider information about events ranging from Taylor Swift's engagement to the awarding of the Nobel Peace Prize last year.
Rep. Ritchie Torres, D-N.Y who sits on the House Financial Services Committee as well as the subcommittee on digital assets and financial technology, sent a letter Thursday to the Commodity Futures Trading Commission demanding the regulator review and investigate these well-timed trades. The CFTC regulates the derivatives markets, which includes prediction markets.
"This pattern raises serious concerns that certain market participants may have had access to material nonpublic information regarding a market-moving geopolitical event," Torres wrote. The letter was shared exclusively with The AP.
"What is the statistical likelihood that of anyone other than an insider trader placing a winning bet 12 minutes before a market-moving presidential announcement," Torres said in an interview with AP. "There are two answers: God, or an insider trader. And something tells me that God it not placing bets around Donald Trump's posts on Truth Social."
Prediction market platforms like Kalshi and Polymarket allow their users to bet on everything from whether it will rain in Phoenix, Arizona next week to whether the Federal Reserve will raise or lower interest rates.
At this time, U.S. residents have limited access to Polymarket, which was banned from the U.S. in 2022. The company has moved to reenter the country by acquiring a CFTC-licensed exchange and clearinghouse, giving it a legal pathway to start offering contracts domestically. The company has begun a limited rollout in the U.S.
Polymarket also operates a separate, crypto-based platform offshore that remains outside U.S. jurisdiction. That platform accounts for most of its activity.
Sen. Richard Blumenthal, D-Connecticut, sent a letter to Polymarket on Thursday demanding the company explain why it continues to allow trades on war and violence as well as whether the company is making any efforts to keep insiders from trading on the platform.
"Polymarket has become an illicit market to sell and exploit national security secrets unlike any in history, and by extension a potential honeypot for foreign intelligence services watching for those same suspicious bets and wagers," Blumenthal wrote.
Republicans have also criticized these platforms and called for bans on these sorts of bets. There are at least two bills pending in Congress co-signed by both parties, one in the House and one in the Senate.
"We don't want to imagine a world where America's adversaries use prediction markets to anticipate our next move," said Rep. Blake Moore, R-Utah, after the release of the AP's findings on the ceasefire wagers.
Polymarket did not immediately reply to a request for comment.
The stakes are high for both Kalshi and Polymarket as they seek approval to operate in the U.S. and nationwide, particularly in the lucrative sports betting market.
Kalshi, which is already regulated in the U.S., and its executives have a goal of making the company the nation's dominant prediction market. Kalshi has also leaned heavily into sports, which critics have said effectively makes it a sports betting platform that dabbles in event-based contracts on the side. Both companies have also announced partnerships with sports teams and even news organizations to broaden their reach as well. The AP has an agreement to sell U.S. elections data to Kalshi.
The competition also carries political overtones. Donald Trump Jr. is an investor in Polymarket through his venture capital firm, 1789 Capital, and separately serves as a paid strategic adviser to Kalshi.
