The U.S. presidential election is 41 days away and the buzzy crypto-based political betting site Polymarket is reportedly close to lining up a bet on its own future in the form of an additional $50 million investment in the company. That’s according to The Information, which cited sources familiar to the matter in an article published on Monday.
The report says the largest online prediction market is also pondering the idea of launching a native token “as a way for users to validate the outcome of real-world events.” Part of this would reportedly entail offering investors warrants that could be redeemed to purchase tokens if Polymarket goes ahead with the plan.
Polymarket’s users can bet on anything from the number of tweets Elon Musk will post this week to who will win the SuperBowl. But the question that is driving Polymarket’s surge in popularity is who will take over the White House in 2025.
A Breakout Year for Polymarket
Polymarket, initially launched in 2020, has had a record year, becoming a breakout star in the world of crypto start-ups. The online betting site is built on Ethereum-based smart contracts and utilizes a protocol called UMA to record verifiable truths onto a blockchain.
Over the past few months, Polymarket has seen record numbers. In August, monthly volume reached an all-time high of $472 million, with a majority of weekly volume related to the election. Polymarket’s homepage currently shows betting charts that project the winner of the presidential election, if there will be another debate and which state will determine the outcome of the election.
Some experts say the financial incentives produce more accurate measures of public sentiment than traditional polling. Polymarket polls accurately foresaw Joe Biden dropping out of the race and the selection of JD Vance as Donald Trump’s vice presidential pick. In July, the founder of FiveThirtyEight, Nate Silver, joined the platform as an advisor.
In May, Polymarket announced it had raised $70 million in two funding rounds with notable investors including Peter Thiel’s Founders Fund, early Coinbase employees, and Vitalik Buterin, the creator of Ethereum.
The Future of Election Betting
Despite a large portion of Polymarket bets pertaining to U.S. political events, the company is not allowed to operate within the United States. As part of a 2022 settlement with the Commodity Futures Trading Commission, Polymarket was hit with a $1.2 million fine and was forced to block U.S.-based IP addresses, alienating a large swath of users.
Meanwhile, an ongoing lawsuit has put the future of election betting in the United States—which has been illegal for decades—into question. It came after another large prediction market called Kalshi sued the CFTC over the agency’s decision in June 2023 to block the company from listing event contracts betting on Congressional seats. A few months later, Kalshi filed a lawsuit against the CFTC.
On September 6th, a judge ruled to lift the prohibition on Kalshi offering these kinds of wagers. Soon after, CFTC filed an emergency stay. A recent hearing saw a panel of judges grill attorneys for both the CFTC and Kalshi in a case whose outcome will have direct implications for Polymarket.
The future of election betting in the United States remains uncertain. In the meantime, Rostin Behnam, the Chairman of the CFTC, said at a conference earlier this month, “We are observing any activity that’s occurring offshore and providing exposure to US customers.”
“If anyone, Polymarket or otherwise, conducts themselves in a way that breaks the law, we will use our civil enforcement authority to make sure that conduct stops,” Behnam said.
