PredictIt and Polymarket both received positive news from federal agencies this week, as competition thickens in the prediction markets space currently dominated by Kalshi.
As Bloomberg News first reported on Tuesday, the US Justice Department and Commodity Futures Trading Commission (CFTC) have ended their investigations into Polymarket. The move appears to have greenlit Polymarket’s return to the US.
On Wednesday, PredictIt announced that under a new agreement with the CFTC, its limit of 5,000 traders allowed per market has been removed, and the position limit has been increased from $850 to the federal individual campaign contribution cap, currently $3,500.
The developments continue a trend of the CFTC taking a hands-off approach to prediction markets during Donald Trump’s second term, a stark departure from the Biden administration.
Donald Trump Jr. joined Kalshi as a financial adviser a week before his father’s inauguration, and Trump’s nominee to head the CFTC, Brian Quintenz – a former Kalshi board member – has suggested he’ll allow prediction markets to continue to offer markets akin to sports wagering.
While Polymarket and PredictIt loom as potential rivals to Trump ally Kalshi, the CFTC’s friendliness toward prediction markets figures to benefit the entire space.
Polymarket rising as major force in US prediction markets
In January 2023, the CFTC ordered Polymarket to shut down markets the agency deemed in violation of the Commodity Exchange Act. Polymarket was under investigation for accepting bets originating from the US and agreed to pay a $1.4 million civil penalty as part of its settlement.
The FBI raided Polymarket CEO Shayne Coplan’s New York City apartment last November, when Biden was still in office, although Coplan was not charged with any crime.
Coplan declared Trump’s win over Kamala Harris as a go-ahead for Polymarket’s return to the US.
“I want to give a lot of credit to the people who fought the battle to go and legalize political prediction markets in America,” Coplan told CNBC on Nov. 7, 2024, two days after the election. “Now we are in the position to be aggressive around expansion.”
Polymarket accepted over $3.6 billion in bets on the election, and its odds, in disagreement with most polls, predicted a Trump victory. Some believe that’s one reason for Trump’s support.
Like Kalshi, Polymarket offers a robust menu of “sports event contracts” – sports wagers, to most.
Around $700 million in trades related to the Super Bowl and $359 million on the Champions League were made on the platform this year, some of which, despite the ban, surely originated from the US.
Another sign that Polymarket wants to go huge in the US: Last month, the company signed on as the official prediction markets platform of X, formerly known as Twitter.
Will PredictIt get into sports?
While PredictIt does not currently offer sports markets, the loosening of restrictions by the CFTC could make an endeavor into sports more feasible.
The belief among gambling industry insiders is that sports is what prediction markets are mostly after. Sports account for a large majority of trading on Kalshi, after all.
And sports betting operators are looking for partners.
FanDuel — whose parent company, Flutter Entertainment, counts Betfair, the world’s largest sports betting exchange, among its assets – has engaged in talks with Kalshi. DraftKings is reportedly looking to acquire Railbird Exchange.
Regulatory and legislative trends are warming the waters for prediction markets, as state tax increases and new federal tax laws potentially drive bettors away from traditional sportsbooks, and they evidently have a friend in the CFTC. Could a BetMGM, Bet365, or Caesars Sportsbook be next to dip their toes in?
