The CEO of prediction markets platform Polymarket says a federal probe into the company has been dropped, marking more momentum in the event contracts space, which has faced controversy over sports offerings that appear very similar to sports betting.
Shayne Coplan, founder and CEO of Polymarket, posted on social media Tuesday that the company has “been cleared of any wrongdoing” after an investigation that he says began eight months ago, when “the FBI broke down my door at 6am and took all my computers and phones, looking for anything that could imply foul play.”
Polymarket had reportedly been under two federal probes—one from the U.S. Department of Justice and another from the Commodity Futures Trading Commission. Both were reportedly centered on the question of whether Polymarket was accepting trades from U.S.-based users, which it is not allowed to do under a 2022 settlement with the CFTC. Polymarket, like Kalshi, offers what are known as future event contracts; users can “trade” on the outcome of future events across a range of areas, including controversial ones like political elections and sports.
U.S. users are not allowed to trade on the Polymarket platform, while similar offerings from Kalshi are allowed, because Kalshi went through the process to self-certify with the CFTC.
Coplan’s post referenced only one probe, although Bloomberg and The New York Times each reported Tuesday that Polymarket had received notice from both federal regulators stating the company had been cleared.
A representative for the DOJ declined to comment, and a representative for the CFTC did not immediately respond to a request for comment. Polymarket could not immediately be reached.
The apparent end of the probes could mean that Polymarket—which in June entered into an agreement to become the official prediction markets partner for X—is eventually allowed to offer its services to U.S. users, as the settlement it reached came under President Joe Biden’s administration.
The news represents yet another positive sign for the broader prediction markets industry as it seeks mainstream legitimacy in the U.S., especially ahead of football season, which is by far the busiest time of year for sports gambling. Industry sources say there will be a flurry of activity, whether by M&A or strategic partnerships, as football season approaches. Front Office Sports recently reported that DraftKings is in talks to buy Railbird Exchange, an upstart prediction markets platform that last month gained federal licensure. Before that, FOS reported that FanDuel has discussed a deal with Kalshi that would include various betting efficiencies.
Additionally, last month Kalshi announced a $185 million Series C funding round valuing the business at $2 billion, one day after Bloomberg reported that Polymarket had amassed more than $200 million at a $1 billion valuation.
Gaming boards in states with legal sports betting have protested the advent of prediction markets, which aren’t subject to the same regulations and taxes as sportsbooks.
Kalshi, which appears to have support from the current administration—last year it hired Donald Trump Jr. as a special advisor—has been the prediction markets platform most in the public eye. That’s because it responded to cease-and-desist orders from regulators in at least seven states with lawsuits against regulators in three: Nevada, New Jersey, and Maryland. Kalshi scored early but significant victories in the Nevada and New Jersey suits, and all the cases remain ongoing.
