Managing Editor
Polymarket will soon be serving US customers again after a three-year absence, thanks to its acquisition of a smaller exchange and clearinghouse recently licensed by the CFTC. It paid $112 million to purchase QCX, which only gained the necessary authorization to serve US investors on July 9.
There’s no specific timeline for a launch, but Polymarket has told users to expect it back “soon.”
Predictions exchanges like Polymarket have been taking the US by storm this year. Kalshi is currently the primary US-facing brand, but the more traditional investment app Robinhood has also made a foray into the space.
The futures contracts offered by these exchanges aren’t an entirely new concept. However, these companies apply them to a wider range of scenarios than they were originally conceived for.
The contracts trade in a similar fashion to shares or options on a stock exchange. However, they come in Yes-No pairs, only one of which will ultimately have value, depending on the outcome of a proposition. Traditionally, businesses would enter into such contracts with speculators in order to hedge against specific risks, like a natural disaster, swing in currency exchange rates, or new tax policy.
There are some limitations on what sort of propositions can be offered on such exchanges. However, the restrictions are narrow. Violent criminal acts such as assassinations are off limits, for instance. So is anything that’s overtly “gambling,” like the throw of a pair of dice. The CFTC’s inclination to police the boundaries has diminished since President Trump took office.
Kalshi, Polymarket, and others have taken advantage of the leeway to offer contracts on everything from elections to movie reviews and—most recently and controversially—the outcome of sports matches. That has put them into direct competition with sportsbooks.
Polymarket vs. Kalshi—What’s the Difference?
Predictions exchanges are particularly popular in the professional poker community as they offer another way that a person with risk tolerance and a head for probabilities can apply those talents to turn a profit.
Kalshi and Polymarket offer products that are similar in concept. Under the hood, though, there are some important differences.
The most obvious of these is that Polymarket is an entirely cryptocurrency-driven platform, while Kalshi uses US dollars and conventional banking methods. For many users, that distinction will be the only important one. Those with an affinity for crypto may choose Polymarket for that reason, while those who prefer fiat will likely stick with Kalshi.
However, Polymarket’s blockchain focus also extends to the contracts themselves. Kalshi determines contract outcomes in-house, while Polymarket relies on a decentralized “oracle.” Holders of the UMA token decide whether a prediction has come true or not based on a system of claims, disputes, and voting.
The upside to Polymarket’s system is that there’s less in-house bureaucracy needed for each contract. That, in turn, means a greater diversity of contracts, most of the time. For instance, when Israel attacked Iran in June, Polymarket had dozens of contracts related to the war and its political ramifications. By contrast, Kalshi had only one relevant offering, related to US-Iran nuclear negotiations.
The downside is that UMA, the final arbitrator of Polymarket contracts, has sometimes been described as a “plutocracy.” Voting is in proportion to tokens committed, and a small number of “whales” hold most of the tokens. These anonymous users are thus the final arbitrators of the most hotly-disputed claims.
End of Investigation Opens the Door for Polymarket
One of the factors that has been holding Polymarket back until this point was that it was still under federal investigation.
Officially, Polymarket left the US market in 2022 after agreeing to a settlement with the CFTC. However, the Biden administration initiated a follow-up investigation into the claim that Polymarket was still allowing American residents to buy and sell shares.
It came out last week that the Department of Justice and CFTC had informed Polymarket that the investigation had concluded. That revelation, QCX’s licensure, and Polymarket’s acquisition of QCX have all played out in the span of two or three weeks.
The federal government’s posture on futures exchanges has changed dramatically under President Trump. Under Biden, the CFTC exiled Polymarket, investigated Kalshi, and sought to change its rules to explicitly prohibit contracts on elections and sporting events. Within six months, all of that has gone out the window. The investigation into Kalshi ended equally abruptly a few months earlier, also without any finding of wrongdoing.
Now it is the state governments that have been trying to put an end to the novel forms of predictions trading. However, they’ve had an easier time cracking down on sweepstakes casinos and player-versus-house fantasy sports than on predictions markets because of a jurisdictional conflict with the CFTC.
Polymarket’s History in the US
Polymarket served US users openly until 2022, when it agreed to pay a fine and exit the US after the CFTC accused it of offering unregulated securities.
Even so, it has continued to have its eye on the US. It reportedly processed over $3.2 billion in trades relating to the 2024 US federal election. Compared to polling, Polymarket users heavily—and correctly—predicted a Donald Trump victory.
In early June, the platform revealed that it had become the official predictions platform of Elon Musk’s X. There is a plan to integrate it with the social media site’s AI service Grok, although that is still in the demo stages.
At one time, having connections to both Trump and Musk would have been an advantageous position. However, their high-profile falling out may now make that more awkward. As things stand, the administration seems favorably disposed to Polymarket and the other prediction markets. However, the President has shown a tendency to retaliate against businesses connected to individuals with whom he has sparred.
