Polymarket is looking into what it calls potentially suspicious trading in relation to Israel’s general election on October 27. Hundreds of newly registered accounts made successful bets on Prime Minister Benjamin Netanyahu’s Likud party just before voting closed, raising renewed fears of possible insider trading on prediction markets.
Polymarket Examines $100K in Profits from Israeli Election Bets
This activity was composed of two contracts on the platform. One was about who would be the next prime minister of Israel, the other about which party would win the most seats in parliament.
The polls had not even closed, and a few blockchain analytics firms had already spotted strange trading patterns. Polysights and Bubblemaps reported large deposits into newly created accounts, many of which had no prior trading history, reported The New York Times.
Bubblemaps identified 101 accounts that received their first funding on election day before the polls closed. Several traders had already sold their positions at a profit after exit polls showed better results for Netanyahu’s party, the analytics firm said.
Some accounts reportedly raked in more than $100,000 in combined profits. A particularly notable wallet placed a $14,000 bet just 12 minutes before polls closed. After the odds changed, the trader sold the position for about $42,000.
Polymarket said its investigative team was probing dozens of new wallets connected to the election markets. The company also reported the suspicious activity to law enforcement. However, the available findings do not establish whether traders had secret information.
Polymarket Faces Growing Scrutiny Over Insider Trading and Security
The probe adds to growing concerns about the integrity of prediction markets. Platforms like Polymarket and Kalshi have seen large volumes of trading but are facing greater scrutiny over insider information and possible market manipulation.
Previous episodes have already raised questions about trading practices. In February, Israeli authorities charged two people with using classified military information to bet ahead of an Israeli military operation against Iran. Some political candidates in the United States also came under fire for trying to trade on their own election campaigns.
Polymarket has recently implemented additional monitoring measures on election-related markets. The initiative seeks to identify suspicious activities that could manipulate market odds or create false impressions about election outcomes.
The latest probe comes as regulatory pressure mounts ahead of the US midterm elections. Senators Elizabeth Warren and John Curtis asked Polymarket and Kalshi about what they were doing to stop manipulation on their platforms.
Polymarket also suffered another security incident on October 29. The platform briefly paused trading after hackers are said to have exploited compromised third-party JavaScript linked to monitoring provider DebugBear. Blockchain analytics firms estimate that up to 737 accounts may have been affected, with losses potentially as high as $2.73 million. Polymarket did acknowledge the incident and said it would reimburse affected users.
The company has also taken steps to bolster consumer protections. In October, it partnered with Birches Health to provide resources for traders with compulsive behaviors. The measures include self-assessment tools, educational materials and access to professional support, as well as account restrictions and self-exclusion options.