Polymarket, a crypto-based prediction market platform, is under scrutiny in France following a surge in betting activity on the 2024 U.S. presidential election. The French gambling regulator, ANJ (Autorité Nationale des Jeux), is considering banning the platform over concerns related to unlicensed gambling and potential market manipulation.
$450 Million in Bets and Payouts
Polymarket has seen an explosive increase in betting volume, with around $450 million expected to be paid out to users following Donald Trump’s projected win. This has raised alarms for French regulators, as the platform has become increasingly popular globally, particularly with bettors from France. One such bettor, a French user named “Theo,” placed a $26 million bet on Trump’s victory and subsequently won $49 million, drawing significant attention to Polymarket’s operations.
French Regulator Concerns
The ANJ has expressed concerns that Polymarket is offering gambling services without the necessary licenses, which is illegal under French law. In France, gambling is only permitted through licensed operators, and Polymarket’s activities have raised doubts about its compliance. The ANJ has the authority to block access to unlicensed platforms, and insiders suggest that a ban could be imminent. If enforced, this restriction would limit French users’ ability to access Polymarket, although some might circumvent it by using VPNs. The ANJ could also exert pressure on media outlets and directories to stop promoting the platform, further restricting its reach in France.
Potential for Market Manipulation
Beyond regulatory issues, the surge in betting volume has also led to concerns about market manipulation. Blockchain analysis firms Chaos Labs and Inca Digital have raised alarms about the possibility of wash trading within Polymarket’s U.S. presidential betting markets. Wash trading occurs when assets are bought and sold repeatedly by the same parties to create a false impression of market activity, potentially misleading other traders and distorting the market signals.
The U.S. Commodity Futures Trading Commission (CFTC) has also shown interest in the regulation of prediction markets due to concerns about potential manipulation. In May, the CFTC proposed stricter rules for such markets to prevent manipulation and ensure fair market practices.
Future of Polymarket
While no final decision has been made, the combination of regulatory scrutiny in France and concerns over market manipulation could impact Polymarket’s ability to operate smoothly in other markets, including the U.S. As the platform continues to attract attention and grow in popularity, its regulatory challenges may intensify, making it a focal point for both national and international regulators.
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