Polymarket is investigating a string of well-timed and profitable trades on the Israeli election this week, raising concerns about potential insider trading on prediction markets. Just before polls closed on Tuesday, hundreds of new accounts placed bets that Benjamin Netanyahu and his Likud party would perform better than opponents. These trades quickly became profitable, with some accounts already cashing out over $100,000 after exit polls showed Netanyahu's party won more seats than early reports suggested.
Polymarket is reviewing dozens of newly created wallets that traded on the election. Two data analysis firms, Polysights and Bubblemaps, have also flagged the activity as suspicious. The trades are visible because every transaction on Polymarket's cryptocurrency-based exchange is logged on a public blockchain ledger.
While the initial analysis is inconclusive, it is difficult to separate insider trading from original research or lucky trades in markets with millions of trades per minute. Prior to the election, Polymarket traders consistently gave opposition leader Gadi Eisenkot a higher chance of becoming the next leader, reflecting polling showing flagging support for Netanyahu. After polls closed, Netanyahu's odds soared to 54% while Eisenkot's dropped to 23%.
Investigators are examining two markets: one on whether Netanyahu will be next prime minister and another on whether Likud would get the most seats. Many wallets hold significant unrealized gains. The election bets are the latest in a string of well-timed wagers on sensitive political events.
Earlier this year, Israeli authorities charged a military reservist and civilian for allegedly using secret military information to wager on Polymarket related to security operations in Iran. In the US, federal prosecutors charged soldier Gannon Ken Van Dyke for allegedly using sensitive information about a military operation in Venezuela to reap over $400,000 in profit. An initial Bloomberg analysis identified more than 600 wallets created on the same day with no prior trading history that bet on Netanyahu winning or Likud coming out on top.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing