Government AI Monitors Prediction Markets as Bot Activity Surges on Polymarket

Automated bots now control over 30% of active accounts on Polymarket, with 14 of the top 20 earners being algorithmically managed. More than 37% of these bot-operated accounts demonstrate consistent performance, raising questions about market fairness and transparency.

Trading volume on Polymarket declined 8.9% in April—the first drop since August—as competitors like Kalshi gained traction. Kalshi reported a 13% volume increase to $14.8 billion, while Polymarket's bets fell to $10.2 billion from $11.2 billion. The platform faces mounting regulatory scrutiny, particularly around insider trading risks involving sensitive geopolitical events.

Senator Elizabeth Warren and 40+ lawmakers pressed the CFTC in March to clarify restrictions on federal employees trading prediction markets. Their letter emphasized the need to prevent exploitation of nonpublic information, citing Polymarket's history of suspicious bets on military actions and other confidential developments.