Prediction market platform, Polymarket, given green light for US relaunch

Polymarket, the world's largest prediction market, has made its highly anticipated reentry into the United States market in July 2023. This comeback follows more than three years of pause, marking a significant milestone in the company's history.

The U.S. Commodity Futures Trading Commission (CFTC) issued a no-action letter to Polymarket, offering relief on some reporting and recordkeeping rules for event contracts. This approval paved the way for Polymarket's relaunch, positioning the platform to re-enter the American market at a pivotal moment when demand for political and event-based betting is surging.

Polymarket's return to the US market comes at a time when rival platform Kalshi has also been making waves. Kalshi, valued at $2 billion at the end of June, secured permission to list contracts tied to political outcomes after challenging the CFTC in court. While Kalshi tested the waters at home during Polymarket's overseas operation, the latter has now returned with the necessary infrastructure to meet U.S. compliance standards, thanks to a $112 million acquisition of QCEX, a CFTC-licensed derivatives exchange and clearinghouse.

Nick Jones, founder of crypto firm Zumo, has expressed his view that prediction markets, including Polymarket, are an "important new frontier." Some on Wall Street believe these markets could potentially be larger than the stock market. However, prediction markets remain a subject of debate, with supporters arguing they offer sharper insights than traditional polling, while critics dismiss them as digital casinos.

Polymarket allows users to wager on a variety of future events, including elections, government policies, sporting events, and entertainment. The platform's return to the US market represents a dramatic turnaround, as it exited in 2021 after settling with regulators over charges of operating an unregistered derivatives exchange.

In a move that further boosts Polymarket's return, the company has attracted fresh backing from 1789 Capital, an investment company aimed at funding the next era of American exceptionalism, backed by Donald Trump Jr.

The CFTC's Division of Market Oversight and the Division of Clearing and Risk have been praised for their role in facilitating Polymarket's reentry, with some describing the process as "record timing" and crediting the "impressive work" of the Commission and staff. As Polymarket dives back into the US market, it remains to be seen how the platform will shape the future of prediction markets in America.

Interest in Polymarket has spiked, particularly around political contracts tied to the 2024 presidential race. As the race heats up, Polymarket's return promises to offer a unique perspective on the political landscape, combining the power of prediction markets with the enthusiasm of American voters.