Polymarket, a cryptocurrency-based prediction market, is under scrutiny from France's gambling regulator, ANJ, due to significant betting activity on the 2024 U.S. presidential election. The platform witnessed extensive participation from an international audience, with projected payouts nearing $450 million following Donald Trump’s anticipated win. This surge in betting volume has raised regulatory concerns, as Polymarket operates as an unlicensed gambling entity.
$450 Million in Election Payouts Raise Regulatory Alarms
The anticipated $450 million in payouts after the U.S. election has placed Polymarket and similar platforms like Kalshi under intensified examination. Despite traditional polls predicting a closer race, Polymarket recorded a substantial increase in Trump's odds leading up to the election, diverging from mainstream poll results.
One high-profile case involved a French trader known as "Theo," who placed a $26 million bet on Trump’s victory and secured a $49 million return. This large-scale bet amplified Polymarket’s visibility, drawing attention from French authorities due to its growing user base in France and raising compliance issues with French gambling regulations.
ANJ’s Potential Restrictions on Polymarket
The ANJ has expressed that Polymarket’s operations qualify as unlicensed gambling, which is only lawful in France through authorized operators. Reports indicate that the ANJ may take steps to block access to Polymarket within France. An ANJ representative noted, “Polymarket essentially engages in betting on uncertain outcomes, fitting the definition of gambling.”
If enforced, this ban would restrict French users' access to Polymarket, though some might attempt to circumvent it using VPNs. The ANJ is also expected to urge media outlets and directories to limit Polymarket’s exposure by halting its advertising and removing platform links.
Regulatory Concerns on Market Manipulation
The significant betting activity on Polymarket has sparked worries about potential market manipulation. Blockchain analysis firms, Chaos Labs and Inca Digital, have reported potential signs of wash trading within Polymarket’s U.S. presidential betting markets, where repeated buying and selling of assets create deceptive trading volumes. Such practices can distort market signals and mislead participants.
The U.S. Futures Trading Commission has also expressed concerns about prediction markets, proposing tighter regulations in May to address the risk of manipulation.
Although a final decision is pending, regulatory actions could have implications for Polymarket’s operations beyond France, potentially impacting its standing in the United States as well.
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