You can make money by betting on next US president?
What's the story
Polymarket, the world's largest cryptocurrency-based prediction platform, is making a legal comeback in the US. The platform has secured a licensed derivatives exchange and is now legally allowed to offer event-based trading, including betting on political outcomes such as the next US president. This development comes after federal investigations against Polymarket were dropped and regulators have shown approval for its operations.
Market return
Comeback and acquisition of QCX
Polymarket, a decentralized prediction market that gained popularity during the 2024 US presidential election, is returning to the US after years of offshore operations. The platform's re-entry comes after its acquisition of QCX, a federally regulated derivatives exchange. This strategic move marks Polymarket's compliance with the US regulatory framework and enables it to offer event-based trading legally, including bets on political outcomes.
Platform mechanics
What is Polymarket?
Founded in 2020 by Shayne Coplan, Polymarket allows users to bet on real-world events using digital assets. The platform operates via smart contracts on the Ethereum blockchain and poses binary questions about future events. Users can buy and sell shares in each outcome, with market prices adjusting based on trading activity. A correct prediction yields a profit while an incorrect one leads to a loss.
Regulatory hurdles
Why the platform was banned in the US
Despite its popularity, Polymarket was effectively banned for US users since 2022 after federal regulators found it operating without proper authorization. The Commodity Futures Trading Commission (CFTC) concluded that Polymarket was offering binary options contracts without required approvals, and ordered the platform to restrict access to American users. This led to further scrutiny from both the CFTC and Department of Justice (DOJ), investigating whether Polymarket had allowed US residents continued access indirectly.
Strategic acquisition
Deal gives regulated US entity to provide political betting
Polymarket's acquisition of QCX and QC Clearing, now known as QCEX, was announced shortly after the investigations were closed. The $112 million deal gives Polymarket a regulated US entity to legally offer its prediction services, including political betting, to American users.