New York — Calls are growing within Congress for investigations into prediction market platform Polymarket following a recent case where groups of anonymous traders made well-timed strategic bets on a major geopolitical event hours before it occurred.
On Wednesday, the Associated Press reported that at least 50 new accounts had been created on Polymarket Big bets on a ceasefire between the United States and Iran In the hours, even minutes, before President Donald Trump announced the ceasefire late Tuesday on social media. These were the only bets made on Polymarket through these accounts.
In January, an anonymous user from Polymarket made… He won $400,000 By betting that Venezuelan leader Nicolas Maduro would be out of office, hours before Maduro was arrested. In the hours before the Iran war began, another account made nearly $550,000 in a series of trades that effectively bet that the United States would strike Iran and that Ayatollah Ali Khamenei would be removed from office.
Such wise bets have raised eyebrows — and accusations that prediction markets are ripe for insider trading. The issue goes beyond these three geopolitical events, according to at least one report. Researchers at Harvard University released a paper last month, where they estimated this using public blockchain data Profits of $143 million It was conducted on Polymarket by individuals who likely have inside 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., a member of the House Financial Services Committee as well as the Subcommittee on Digital Assets and FinTech, sent a letter Thursday to the Commodity Futures Trading Commission asking the regulator to timely review and investigate these trades. the The Commodity Futures Trading Commission (CFTC) regulates financial derivatives marketswhich includes prediction markets.
“This pattern raises serious concerns that some market participants may have accessed material non-public information related to a market-moving geopolitical event,” Torres wrote. The message was shared exclusively with The Associated Press.
“What is the statistical probability that anyone other than an insider trader would place a winning bet 12 minutes before the presidential announcement that moves the market,” Torres said in an interview with the AP. “There are two answers: God, or an insider. And something tells me that God is not betting on 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.
Currently, US residents have limited access to Polymarket, which was banned from the US in 2022. The company has moved to return to the country by acquiring a CFTC-licensed exchange and clearinghouse, giving it a legal path to start offering contracts locally. The company has begun a limited rollout in the United States
Polymarket also operates a separate offshore cryptocurrency-based platform that remains outside US jurisdiction. This platform accounts for most of its activity.
Sen. Richard Blumenthal, D-Conn., sent a letter to Polymarket on Thursday demanding that the company explain why it continues to allow trading in war and violence as well as whether the company is making any efforts to prevent insiders from trading on the platform.
“Polymarket has become an illicit market for the sale and exploitation of national security secrets unlike any other in history, and thus a potential trap for foreign intelligence services monitoring the same suspicious bets and bets,” Blumenthal wrote.
Republicans also criticized these platforms and called for banning this type of betting. There are at least two bills pending in Congress that have been signed by both parties, one in the House and one in the Senate.
“We don’t want to imagine a world in which America’s enemies use prediction markets to predict our next move,” Republican Rep. Blake Moore of Utah said after the Associated Press’ findings on ceasefire bets were published.
Polymarket did not immediately respond to a request for comment.
The stakes are high for both Kalshi and Polymarket as they seek approval to operate in the US and nationwide, particularly in the lucrative sports betting market.
Kalshi, which is already regulated in the United States, and its executives aim to make the company the dominant prediction market in the country. Calcci has also leaned heavily into sports, which critics said makes it a sports betting platform that operates on event-based contracts on the side. The two companies have also announced partnerships with sports teams and even news organizations to expand their reach as well.
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 advisor to Kalshi.