Polymarket is probing suspicious bets on Israel's election for insider trading

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Hundreds of new accounts backed Benjamin Netanyahu's Likud party before polls closed, and some cashed out over $100,000 in total

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Polymarket has opened an inquiry into a run of profitable bets on this week's Israeli election that were suspiciously well timed, according to Bloomberg. The case adds to growing worries that prediction markets are open to abuse by traders with inside information.

Polymarket's internal investigative team told Bloomberg that it is looking closely at dozens of recently set-up wallets used to place election bets. The team is examining two markets: one asking if Benjamin Netanyahu ends up as the country's next premier, and one asking if Likud takes more seats than any other party.

Hundreds of new accounts wagered ahead of Tuesday's close of voting that Netanyahu and Likud would prevail over their rivals, according to Bloomberg's review of data on Polymarket's blockchain ledger. Bloomberg identified upward of 600 wallets that were all opened on a single day and had never traded before, and that backed either a Netanyahu victory or Likud finishing first.

The trades turned profitable once certain exit polls put Likud's seat count above what initial coverage had indicated, according to Bloomberg. Several of the accounts have withdrawn a combined total above $100,000, while numerous other wallets are sitting on paper profits.

Two analytics firms behind earlier exposés of insider-trading episodes on prediction markets, Polysights and Bubblemaps, told Bloomberg they too marked the trades as suspicious and are digging into what happened. Each trade on Polymarket's international exchange, which runs on crypto, is recorded on a public ledger, so anyone can see the bets.

Bloomberg said its early findings cannot settle the question, since insider activity is difficult to distinguish from a trader's own research or plain good luck.

Since mid-July, Polymarket traders had rated opposition leader Gadi Eisenkot as likelier than Netanyahu to end up as the country's next prime minister, according to Bloomberg. Once voting ended Tuesday, Netanyahu's odds climbed to 54% and Eisenkot's slid to 23%.

Bubblemaps previously flagged nine linked anonymous accounts that made more than $2.4 million on bets about U.S. military outcomes in the Iran conflict. Israeli authorities have also brought charges this year against a military reservist and a civilian, accusing them of betting on Polymarket about the country's security operations in Iran with secret military information, according to Bloomberg.

In the U.S., federal prosecutors have charged soldier Gannon Ken Van Dyke, accusing him of exploiting confidential details of a Venezuela military operation to pocket over $400,000 on Polymarket, according to Bloomberg. Van Dyke has pleaded not guilty.

Polymarket also is policing bets on the Nov. 3 U.S. midterm elections. Shana Bautista, the company's head of global intelligence and investigations, told NPR that the 16 people on her team, together with a newly built system for watching elections, are keeping tabs on wagers tied to the vote. She said the company has investigated "dozens" of election-related cases.

"If you decide that you are smarter and can do it, we will find you," Bautista told NPR.

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