Polymarket Faces French Ban Amid $451 Million Bets on 2024 U.S. Presidential Election

Polymarket, a blockchain-based prediction market platform, is currently under scrutiny by France’s gambling authority, the Autorité Nationale des Jeux (ANJ), which is contemplating a ban on the platform. The heightened attention comes after an unprecedented surge in betting activities related to the upcoming 2024 U.S. presidential election. Notably, the platform anticipates distributing approximately $451 million to participants, contingent on the outcome of Donald Trump’s potential victory.

The remarkable increase in betting volumes on Polymarket has triggered concerns among French authorities due to the platform’s lack of a local gambling license. The exponential growth in stakes highlights the platform’s global reach, yet it concurrently raises questions about regulatory compliance and the legality of its operations within France’s jurisdiction.

The staggering figure of $451 million, projected as payouts to successful bettors post-election, underscores the growing influence of prediction markets in political forecasts. Despite traditional polling methods suggesting a competitive race, platforms like Polymarket and Kalshi have shown a noticeable increase in Trump’s predicted success, suggesting a divergence from mainstream polls.

A notable case involves a trader from France, known as “Theo,” who wagered approximately $27 million on a Trump victory, subsequently winning around $50 million. This significant bet captured the attention of French regulators, amplifying their scrutiny of Polymarket’s operations and its adherence to the nation’s gambling regulations.

The ANJ is considering decisive action, potentially blocking access to Polymarket within France. The regulator emphasizes that gambling activities are strictly regulated and permitted only for licensed operators, a criterion Polymarket currently does not meet. Sources within the ANJ suggest that the platform’s operations fall under unregulated gambling, raising the specter of a nationwide ban.

If enforced, the ban would effectively prevent French users from accessing Polymarket’s services. However, it remains to be seen how users might circumvent such restrictions using virtual private networks (VPNs). Additionally, the ANJ could lobby media agencies and digital platforms to cease promoting or linking to Polymarket, further minimizing its reach within the country.

Beyond the immediate legal considerations, the increased activities on Polymarket have spurred discussions about potential market manipulation. Reports from blockchain analytics firms, Chaos Labs and Inca Digital, have flagged unusual trading patterns, suggesting possible wash trading within the platform’s U.S. presidential election markets. This manipulative strategy, where assets are repeatedly bought and sold to inflate market activity artificially, poses a significant threat to market integrity and participant trust.

The U.S. Commodity Futures Trading Commission (CFTC) has also expressed its concerns regarding prediction markets. Earlier this year, the CFTC proposed new regulations aimed at tightening control over these markets to mitigate risks of manipulative practices.

While no definitive regulatory action has been taken against Polymarket in the U.S., the unfolding situation could have far-reaching implications for its operations not only in France but globally. As authorities continue to evaluate the legality and ethical implications of prediction markets, platforms like Polymarket may face increased scrutiny and potential restrictions in various jurisdictions. The outcomes of these regulatory deliberations will likely shape the future of prediction markets, balancing innovation with strict compliance to legal standards.