Polymarket, a prediction-based trading platform, enhances its fraud detection capabilities ahead of the U.S. elections.
Polymarket is a service that, akin to sports platforms, provides traders with betting based on predictions. Unlike sports betting, however, Polymarket ‘bets’ expand beyond the field. It covers a broad swathe of areas—from predicting the outcome of a deal pushing through, to whether a specific person (say a celebrity during the Oscars) will utter a certain phrase (for example, the word “blockchain”); the bets range from the small and the mundane, to key landmark decisions. Its success is tied to the emergence and prevalence of publicized events. These are the anchors on which odds-based ‘bets’ are made on the platform.
Polymarket’s controversy stems from the very nature to the key to success on the platform: knowledge. Using the same example as the Oscars mentioning, a scriptwriter, for example, has crucial access to inside information that they can then assuredly bet on. A government official, in another example, can bet on a contract being successfully bid on. Both of these involve actors that have an unfair advantage in (a) having access to inside information, and more crucially, (b) having access to betting on Polymarket using that inside information.
A recent example of exploiting this advantage was a teleprompter for U.S. president Donald Trump. According to multiple sources, he used the script which he was knowledgeable of to make targeted bets on what Trump will utter during one of his speeches. This teleprompter made nearly 100,000 US Dollars on a similar site, ‘Kalshi’, which focuses more on utterances. A soldier made nearly 400,000 US Dollars on predicting the capture of Venezuelan leader Nicolas Maduro. Inside the U.S. administration, government, and military, therefore, the problem of insider knowledge and exploiting is a key issue.
CNN reports that over 8 million US Dollars made have been tied to bets on war markets. According to a watchdog, these are linked to over 150 accounts—meaning at least 150 individuals are liable for insider betting.
This has prompted Congress to draft bills that aim to mitigate these fraudulent bets. These cover bets by government officials, bets on topics from which influencers to said topics know the outcome of (say, the enactment of a military deployment). On Polymarket’s end, it aims to increase transparency and accountability by partnering with Chainalysis, a blockchain-powered platform, to monitor—in real time—transactions made, and who made said bets.
Polymarket is taking a step ahead to address these issues; however, current U.S. legislation is still lacking in oversight and policies, as evidenced by bills still in the process of being passed.
