Prediction Markets Surge Despite US Restrictions

Prediction markets have seen a dramatic increase in the total value of crypto assets, which has tripled this year, driven largely by the ongoing US presidential election. This growth is particularly notable given the regulatory challenges faced by these platforms, especially Polymarket, which controls 73% of the sector’s assets.

Polymarket's Controversial Position

Polymarket, a leading prediction market, has garnered attention not just for its wide range of event bets but for its specific focus on high-profile political figures like Donald Trump, Joe Biden, and Kamala Harris. In July alone, election-related wagers on Polymarket surpassed $1 billion.

Despite its claims, Polymarket's approach to US residents has raised questions. The platform, based in Panama, states in its Terms of Service that it does not offer services to US residents. This policy is similar to other offshore crypto markets that have faced scrutiny for allegedly ignoring their own restrictions and catering to US users.

Reports of US Users

Bloomberg reports suggest that many US residents are indeed using Polymarket, despite its stated restrictions. Some users, fearing potential repercussions, have chosen to remain anonymous. Additionally, Polymarket's promotional materials have been spotted in prominent locations such as Manhattan and the Republican National Convention, and American investors, including Peter Thiel, have been involved in its fundraising efforts.

Platform's Compliance Efforts

Polymarket maintains that it is actively enforcing its ban on US users by implementing IP and geolocation measures. The platform's growth during the election cycle reflects the broader trend in prediction markets, which often experience spikes in activity during significant political events.

Regulatory Scrutiny

Polymarket is currently under scrutiny by the Commodity Futures Trading Commission (CFTC) and has committed to not allowing US residents to use its platform. This commitment underscores the ongoing tension between innovative financial technologies and regulatory frameworks, particularly as these platforms continue to thrive despite legal and compliance challenges.