As activity at prediction markets proliferates, roughly $200 million worth of trades placed at Polymarket were flagged for potential insider trading in 2026, Bloomberg found.
Bloomberg reported the number after analyzing approximately 34,000 transactions placed from Aug. 2025 through June 2026 that were highlighted by prediction markets analytics platform Polysights. The review noted that insider activity became more common starting in January, despite there not being any regulatory changes allowing the practice.
Insider trading soars
Insider trading is totally illegal at prediction markets. The Commodity Futures Trading Commission, the body in charge of regulating prediction operators, and the Department of Justice are both able to bring enforcement against parties found guilty of engaging in the practice, which includes using non-public information, influence, and access to win profit.
Polysights flags potential insider activity after evaluating traders across eight metrics. Those include the amount of money wagered, both in a vacuum and relative to the average consumer, when the customer’s account was created, the market probabilities at the time of the trade, and the concentration of the trader’s activity in the market in question.
Bloomberg ultimately found that roughly $200 million in trades from Jan. 1 to June 30 fit Polysights’ requirements for possible insider activity. These flags aren’t proof of illegality, but they marked trades that were distinctly different from others placed on Polymarket.
Polysights could not cross-reference or track trades placed at Kalshi, since only Polymarket’s trades are publicly visible on a blockchain network.
Registered incidents
Many of the 34,000 trades that were tagged by Polysights pertained to different industries, including politics, gossip, and military actions. The last of these three picked up steam toward the end of February, around the time that the U.S. and Israel launched a coordinated opening strike against Iran.
Profits were dominated by “whale accounts,” or individuals who risked substantially larger amounts than average traders. The top 1% of wallets that made money in Polymarket’s prediction markets were responsible for more than half of the winnings.
Additionally, 57% of those whale accounts were created less than 24 hours before they placed trades that were later flagged by Polysights. That included one individual who won $370,000 just two hours after their wallet was created by predicting that a permanent peace treaty between the U.S. and Iran would be reached at a 6% probability.
Another reported instance saw 38 connected wallets make trades scattered around 90 markets related to Iran and Venezuela. 98% of the trades were graded as winners, and all of the wallets made about $1.6 million — about $61 million in total. All of the wallets later withdrew their funds through the same Coinbase deposit account.
Staying ahead of illegal activity
The maturation of prediction markets has made it more difficult to track nefarious activity.
“[Insiders are getting] more sophisticated about how they enter markets and how they accumulate trades,” Polysights creator Tre Upshaw told Bloomberg.
Despite that, Polymarket told Bloomberg that it reported nearly 100 accounts to law enforcement and is constantly using integrity monitoring programs to keep tabs on its markets.
Maintaining a safe trading environment is crucial for prediction operators, particularly during this time of growth. Prediction operators reported more than $50 billion in global notional trading volume in June, driven by the FIFA World Cup.
The upcoming NFL season and midterm elections will ensure that customers still have plenty of options in the coming months.
The Trade Handle Prediction Markets Take
Prediction markets can’t exist without transparency and fair practices; however, there are still gray areas that blur the lines of what is and isn’t fair. For example, one individual waited for 12 hours outside of the San Francisco 49ers’ stadium before the Super Bowl so he could hear how long the national anthem was during rehearsal, and he used that information to predict $50,000 on how long the anthem would last. Insider trading is already patently forbidden, but these situations bring into question what is and isn’t considered market manipulation.