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Polymarket

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Polymarket
IndustryEvent-based trading
GenrePrediction market platform using Polygon
Founded2020; 4 years ago (2020)
FounderShayne Coplan
Headquarters1280 Lexington Avenue
New York, NY 10028
U.S[1]
Key people
Shayne Coplan (CEO)
Websitepolymarket.com

Polymarket is an American cryptocurrency-based prediction market, headquartered in Manhattan, New York City. Launched in 2020, it offers a platform where investors can place bets on various future events, including economic indicators, weather patterns, awards, as well as political and legislative outcomes. Participants can deposit USDC cryptocurrency through the Polygon blockchain network and trade shares that represent the likelihood of specific outcomes occurring in the future.

Polymarket has blocked access to US customers since 2022, following a settlement with the Commodity Futures Trading Commission, which accused the company of running an unregistered derivatives-trading platform.[2]

History

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Founded in 2020 by Shayne Coplan,[3] Polymarket is a prediction market that allows users to gain/lose on the outcome of world events.[4] In January 2022, Polymarket was fined US$1.4 million by the Commodity Futures Trading Commission (CFTC), and received a cease and desist order for regulatory violations, including failure to register as a Swap Execution Facility.[5][6] According to the CFTC, Polymarket offered "substantial cooperation" throughout the investigation, which resulted in the company receiving a lower fine.[3]

The market comments section was modified to filter comments to Holders Only due to increased abusive content within the comments.

In May 2022, Polymarket appointed J. Christopher Giancarlo, a former Commissioner of the CFTC, as chairman of its advisory board.[7] In May 2024, the company announced that it had raised US$70 million across two funding rounds.[8] These rounds included investments from Vitalik Buterin, the co-founder of Ethereum, and Founders Fund, a venture capital firm founded by Peter Thiel.[3]

In June 2023, Mother Jones reported that interest around the company had increased after a tweet about the outcome of the Titan submersible went viral;[9] the premise of the bet was whether the submersible would be found by a certain date,[9] rather than a wager on the fate of the passengers.[10] Polymarket had over 60 markets available at the time of the submersible wager, including the outcome of the Guatemalan presidential election, the likelihood of Twitter suing Meta, and the likelihood that Russia would use nuclear force.[10]

2024 United States elections

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In 2024, the outcome of U.S. elections became the most active market on the platform,[8] with over $3.3 billion (as of November 5, 2024)[11] wagered on the presidential race between the Republican candidate Donald Trump and Democratic candidate Kamala Harris.[3] Nate Silver, founder of polling analysis firm FiveThirtyEight, became an advisor to Polymarket in 2024.[12] As of September 2024, Polymarket operates its election prediction operations offshore, as domestic operations would be regulated by the CFTC.[13]

A few days after the 2024 U.S. presidential debate held on June 27, 2024, Polymarket predicted a 70% chance that Democratic candidate Joe Biden would withdraw from the 2024 U.S. presidential election (an increase from 20%), weeks before he officially announced his withdrawal.[14] By contrast, on August 5 Polymarket showed 68% odds Kamala Harris would pick Pennsylvania governor Josh Shapiro as her running mate, with Minnesota governor Tim Walz at 23% odds. Harris selected Walz the next day.[15][16]

On October 7, 2024, Polymarket showed a spike in the odds Donald Trump would win the 2024 election, to 53.3%, with a corresponding decline in Kamala Harris's odds, to 46.1%. Two Polymarket competitors continued to show Harris with better odds of winning, at about 51%; Polymarket also showed a slight edge for Harris throughout September. That day, the FiveThirtyEight simulation model found Harris had a 55% chance to win the election, while elections statistician Nate Silver said his model gave Harris 54.7% odds. Forbes reported on theories for the Polymarket divergence, including that one or more major wagers had been placed on Trump, possibly because Elon Musk had spoken at a Trump rally two days earlier, and had previously promoted Polymarket. On the day of the Trump spike, Musk reposted an X post that asserted "Kamala is collapsing before our eyes." However, due to Polymarket lacking a cap on individual investor amounts, large wagers by one or a few bettors may not reflect a material change in the election landscape. Silver, a Polymarket advisor, said the shift in Trump's favor was a "larger swing than is justified."[17] Polymarket competitor Predictit had since shown Trump with better odds of winning after previously favoring Kamala Harris.[18]

The divergence continued into mid October 2024, showing Trump with 60% odds on October 18. The Wall Street Journal reported the market moves might be a mirage created by four bettors with about $30 million in Trump wagers, though the bets were not necessarily nefarious. The four bettors behaved in similar fashion, leading at least one blockchain analyst to conclude there was "strong reason to believe they are the same entity." Polymarket initiated an investigation of potential market manipulation for an influence campaign in favor of the Donald Trump 2024 presidential campaign.[19] The company confirmed on October 24 that the four accounts were controlled by one French trader with "extensive trading experience and a financial services background," finding no evidence of efforts at market manipulation.[20] The trader ultimately won $85 million upon Trump's victory.[21]

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On November 13, 2024, the FBI raided Coplan's home and seized his phone. According to Bloomberg News, the Department of Justice is investigating Polymarket for allegedly allowing U.S.-based gamblers to make bets on the website.[22][23][24][25]

On December 2, 2024 The French authority, l’Autorité Nationale des Jeux (ANJ), geo-blocked Polymarket.com. ANJ watched Polymarket, which was run by Web3 developer Adventure One QSS, during November. It stated that the website's gaming offerings were likely in violation of French laws.[citation needed]

See also

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References

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  1. ^ "Polymarket". CB Insights. Retrieved October 21, 2024.
  2. ^ "CFTC Orders Event-Based Binary Options Markets Operator to Pay $1.4 Million Penalty". January 3, 2022. Retrieved November 16, 2024.
  3. ^ a b c d Folk, Zachary (May 14, 2024). "Peter Thiel Invests In Polymarket Political Betting Platform—But The Future Of Gambling On Elections Remains Unclear". Forbes. Archived from the original on September 6, 2024. Retrieved June 19, 2024.
  4. ^ "A resurgent online betting market is boosted by crypto and current events". NBC News. July 10, 2023. Archived from the original on September 6, 2024. Retrieved December 13, 2023.
  5. ^ "CFTC Fines Polymarket and Issues a Cease and Desist". Yahoo Finance. January 4, 2022. Archived from the original on December 13, 2023. Retrieved December 13, 2023.
  6. ^ "Event-Betting Platform Polymarket to Pay $1.4 Million U.S. Fine". Bloomberg.com. January 3, 2022. Archived from the original on January 15, 2022. Retrieved December 13, 2023.
  7. ^ "Crypto Betting Service Polymarket Taps Ex-CFTC Head as Chair After Agency Probe". Bloomberg. May 19, 2022. Retrieved October 20, 2024.
  8. ^ a b Natarajan, Sridhar; Pan, David (May 14, 2024). "Peter Thiel's VC Firm Backs Election Betting With Polymarket Investment". Bloomberg. Archived from the original on September 6, 2024. Retrieved June 19, 2024. Polymarket has raised $70 million across two rounds, with the most recent raise led by Founders Fund...
  9. ^ a b Breland, Ali (June 23, 2023). "Meet the Internet Gamblers Who Won Big Betting on the Submarine's Fate". Mother Jones. Archived from the original on April 24, 2024. Retrieved February 29, 2024.
  10. ^ a b "A resurgent online betting market is boosted by crypto and current events". NBC News. July 10, 2023. Archived from the original on December 13, 2023. Retrieved December 13, 2023.
  11. ^ "Polymarket | Presidential Election Winner 2024". Polymarket. Retrieved September 25, 2024.
  12. ^ Salmon, Felix (July 22, 2024). "Prediction markets notch an important win with Biden's drop out". Axios. Archived from the original on September 6, 2024. Retrieved July 22, 2024.
  13. ^ Schwartz, Lee (September 9, 2024). "Polymarket likely to remain offshore for now despite ruling in favor of U.S. election betting". Fortune. via Yahoo! Finance Canada.
  14. ^ Tapscott, Alex. "Forget the pundits and polls—internet prediction markets anticipated Biden's withdrawal weeks ago". Fortune.
  15. ^ Reynolds, Sam; Hochstein, Marc (August 5, 2024). "Harris Likely to Pick Pennsylvania Gov. Shapiro for Veep, Prediction Markets Say". CoinDesk.
  16. ^ King, John; Zeleny, Jeff; Gangel, Jamie; Lee, MJ; Strauss, Daniel; Krieg, Gregory; Holmes, Kristen; Klein, Betsy (August 6, 2024). "Harris decides on Tim Walz as running mate". CNN.
  17. ^ Small, Derek (October 7, 2024). "Trump's Election Odds Spike On Polymarket As Musk Touts Betting Site". Forbes.
  18. ^ Sorkin, Andrew Ross. "Prediction Markets Tell a Different Story From the Polls". The New York Times. Retrieved October 17, 2024.
  19. ^ Osipovich, Alexander (October 18, 2024). "A Mystery $30 Million Wave of Pro-Trump Bets Has Moved a Popular Prediction Market". The Wall Street Journal. Archived from the original on November 2, 2024. Retrieved October 18, 2024.
  20. ^ Breuninger, Kevin (October 24, 2024). "French trader bet over $28 million on Trump election win using 4 Polymarket accounts". CNBC.
  21. ^ Osipovich, Alexander (November 13, 2024). "Trump Whale Scores $85 Million Windfall on Election". The Wall Street Journal. Retrieved November 16, 2024.
  22. ^ Miller, Myles; Beyoud, Lydia (November 13, 2024). "Polymarket Investigated by DOJ for Allegedly Letting US Users Bet on Platform". Bloomberg.com. Retrieved November 15, 2024.
  23. ^ Osipovich, Alexander (November 13, 2024). "FBI Seizes Polymarket Founder's Phone in Raid of Home". The Wall Street Journal. Retrieved November 13, 2024.
  24. ^ Conlin, Michelle (November 13, 2024). "FBI raids Polymarket CEO's home, seizing phone, electronics". Reuters. Retrieved November 15, 2024.
  25. ^ Prentice, Chris (November 14, 2024). "US criminal, civil authorities probing Polymarket, source says". Reuters. Retrieved November 16, 2024.
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