Polymarket probes suspicious trading in Israeli election markets and reports it to law enforcement

Polymarket says it is investigating what it describes as potentially suspicious trading tied to Israel's general election on October 27. Hundreds of newly registered accounts reportedly made winning bets on Prime Minister Benjamin Netanyahu's Likud party shortly before voting ended, reviving concerns about insider trading on prediction markets.

Two contracts were involved: one on who would become the next prime minister, and one on which party would take the most parliamentary seats. Blockchain analytics firms Polysights and Bubblemaps flagged unusual patterns before the polls had closed, according to a report by The New York Times. Bubblemaps identified 101 accounts that received their first funding on election day ahead of the close of voting. Several of those traders sold at a profit after exit polls looked favourable for Netanyahu's party.

Some accounts reportedly earned more than $100,000 in combined profits. One wallet stood out: it placed a $14,000 bet 12 minutes before polls closed and later sold the position for roughly $42,000 once the odds shifted. Polymarket said its investigative team is looking at dozens of new wallets linked to the election markets and has reported the activity to law enforcement. The available findings, however, do not establish whether any of the traders had inside information.

The case adds to wider worries about integrity on prediction platforms such as Polymarket and Kalshi, which have seen heavy trading volumes and growing scrutiny over insider information and possible manipulation. In February, Israeli authorities charged two people with using classified military information to place bets ahead of an Israeli military operation against Iran. Some US political candidates have also faced criticism for trying to trade on their own campaigns. Polymarket has recently added monitoring measures to election-related markets, aimed at spotting activity that could distort odds or give a false picture of outcomes.

Regulatory pressure is building ahead of the US midterm elections. Senators Elizabeth Warren and John Curtis have asked Polymarket and Kalshi what they are doing to prevent manipulation.

The platform also dealt with a security incident on October 29, when it briefly paused trading after hackers reportedly exploited compromised third-party JavaScript tied to monitoring provider DebugBear. Analytics firms estimate up to 737 accounts may have been affected, with losses of as much as $2.73 million. Polymarket acknowledged the incident and said it would reimburse affected users. In October, it also partnered with Birches Health to offer resources for traders with compulsive behaviours, including self-assessment tools, educational materials, account restrictions and self-exclusion options.