NEXTPredict

Reports of a fraud attack affecting Polymarket have intensified questions around customer protection, fraud monitoring and the responsibilities of prediction-market platforms. As the sector scales yet faces increased scrutiny, Will Whitehead, Commercial Director at GeoLocs, and Mark Dufty, Head of Game Analysis at Advanced Compliance Technology, examine whether traditional fraud controls are enough and what technology needs to do differently. What follows is a Q&A with Whitehead and Dufty.

Aries has added prediction markets to its mobile trading platform, giving eligible US customers access to election, economic and financial event contracts through Interactive Brokers-affiliated ForecastEx. The Oct. 30 launch comes just days before the Nov. 3 midterm elections, with contracts allowing traders to take positions on political outcomes and changes in economic indicators. Aries will use ForecastEx to list and clear the contracts.

This week in prediction markets news, covering Oct. 24-30, NEXTPredict.io tracked Utah’s escalating confrontation with the prediction market industry, Kalshi’s new $40bn valuation and growing scrutiny of election markets ahead of the US midterms. Other developments included Polymarket’s security breach and fresh questions about its regulatory compliance, prediction-market expansion at Robinhood, Cboe and Coinbase and a wave of new products and partnerships across the industry.

DraftKings, FanDuel and Fanatics, three of the largest US sportsbook operators to expand into federally regulated prediction markets, are restricting event contract trading in Utah as the state’s crackdown on the industry escalates. Fanatics Markets confirmed to NEXTPredict.io that it will stop prediction market trading in Utah on Nov. 4, a broader restriction than those implemented by DraftKings and FanDuel in the state.

Cboe Global Markets expects to launch its company-specific prediction market contracts in November, having secured regulatory approvals and expanded brokerage partnerships as it pursues new trading opportunities. The exchange operator outlined its plans today, Oct. 30, alongside third-quarter earnings showing an 18% increase in net revenue to $712.2m. Its upcoming contracts will cover key performance indicators (KPIs) at 23 publicly traded companies.

The Securities and Exchange Commission (SEC) is paying closer attention to prediction markets, particularly trading that raises questions about insider information or price manipulation. David Woodcock, the SEC’s enforcement director, told Bloomberg in an exclusive interview published Oct. 29 that the agency is monitoring contracts involving corporate earnings and business performance. He warned that traders could face federal enforcement action.

Coinbase’s prediction markets business passed $200m in annualized revenue in the third quarter, the company said in its Q3 earnings presentation on Thursday. That was up from more than $100m in Q2.

ProphetX Co-Founder Jake Benzaquen said prediction markets should stop insider trading for now to protect public perception, though he agreed it could make markets more accurate. Speaking at the NextPredict NYC Summit on Oct. 23, Benzaquen said the industry should focus on preventing insider trading while it fights for legitimacy, including in an expected Supreme Court case. The remarks came during “What Comes After Yes or No?“, a panel moderated by The Atlantic CEO Nicholas Thompson.

Polymarket halted trading on its international prediction market platform Thursday after a third-party security breach, as traders reported having hundreds of thousands of dollars stolen from their accounts. The company said it had identified and fixed the issue affecting Polymarket.com and referred the incident to law enforcement.

Two US senators are demanding answers from Kalshi and Polymarket about insider trading and market manipulation in election-related contracts, giving the prediction market operators until Election Day to respond to a bipartisan inquiry announced just five days before the Nov. 3 midterms. Sen. Elizabeth Warren (D-Mass.), the ranking Democrat on the Senate Banking Committee, and Sen. John Curtis (R-Utah) sent a letter dated Oct. 28 to Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan.