Polymarket Investigates Suspected Manipulation in Israel Vote

Polymarket, the world's largest prediction-betting platform, is investigating dozens of suspicious bets placed on Israel's election this week, a company spokesman said overnight. The company has reported the suspected activity to law enforcement, Bloomberg reported.

According to the New York Times, the bets under investigation were placed by hundreds of newly created accounts that wagered on Prime Minister Benjamin Netanyahu's victory and on the Likud party winning the most seats. The accounts placed their bets shortly before polls closed Tuesday, on the questions of who would become prime minister and which party would win the most Knesset seats.

Prime Minister Netanyahu (Photo: Yonatan Sindel/Flash90)

Data analytics firm Polysights was among the first to flag the suspicious activity. "In the last 24 hours our tools detected massive flows of 'YES' purchases in new wallets," the company wrote on social media Tuesday. "This is definitely a matter worth investigating."

As voting ended Tuesday, the value of the bets surged rapidly when exit polls showed Likud was set to win more seats than pre-election surveys had predicted. Before vote-counting finished Thursday, some of the new accounts had already sold their positions to other traders and locked in profits.

One digital wallet examined by the New York Times created an account six minutes before placing a $14,000 bet on Tuesday, twelve minutes before polls closed, and cashed out with a $42,000 profit on Wednesday after the odds shifted. It is not known whether this is one of the accounts Polymarket is investigating.

Gadi Eisenkot (Photo: Miriam Alster/Flash90)

Prediction markets under scrutiny

Prediction markets like Polymarket and Kalshi allow users to bet on anything from election outcomes in various countries to which couple will marry on Netflix's "Love Is Blind." The companies handle billions in such wagers, but their popularity has raised concerns about violations of gambling laws and manipulation by users with inside information.

The Israel case is not the first. In February, Israeli authorities charged two individuals with using classified military intelligence to place bets on Polymarket before the strike on Iran. In April, three U.S. political candidates were found to have attempted to bet on their own races. In August, Kalshi banned former Congressman George Santos after he bet on his own attendance at President Donald Trump's State of the Union address six months earlier.

In the United States, concerns are mounting over insider trading and manipulation in prediction markets ahead of midterm elections scheduled for next Tuesday. Democratic Senator Elizabeth Warren of Massachusetts and Republican Senator John Curtis of Utah sent a letter Wednesday to Polymarket and Kalshi demanding answers about the extent of manipulation that could occur on their platforms.

Polymarket announced Tuesday a dedicated monitoring program for the midterm elections "to identify potential attempts to skew election markets, distort probabilities, or create an artificial market consensus."

On Thursday, Polymarket froze trading for about an hour after some users reported on social media that funds had been withdrawn from their accounts. The company said DebugBear, a debugging tool it uses, was involved in the incident. DebugBear said in a statement it had been affected by an ongoing security incident. Polymarket posted on social media that the company would "make things right" and fully compensate affected traders. No connection was reported between that incident and the suspected bets on Israel's election.

In the days before the election, the picture on prediction markets was unambiguous and forecast a change of government. Bettors poured massive sums against Likud and in favor of Gadi Eisenkot. Polymarket gave Eisenkot a 56% chance of becoming the next prime minister, compared to just 27.5% for Netanyahu. But within hours, Eisenkot's huge lead was erased and the pendulum swung sharply toward the prime minister. The Israeli political market on the platform has drawn more than $70 million so far.