Polymarket faces renewed CFTC probe over U.S. access controls

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Polymarket CFTC probe on access

Highlights

The CFTC is investigating whether Polymarket violated its 2022 settlement by failing to sufficiently block U.S. users from its main offshore platform.
The probe focuses on Polymarket's customer location systems, U.S. advertising, and onboarding processes for its recently launched U.S. platform.
Rapid growth in prediction markets, including Polymarket, is attracting heightened regulatory and political scrutiny over potential insider trading and efficacy concerns.

CFTC inquiry revisits 2022 settlement terms

As first reported by Reuters, the Commodity Futures Trading Commission is investigating whether Polymarket violated a 2022 settlement that required it to bar U.S. users from its main offshore platform, according to two people familiar with the matter.

The regulator is probing whether Polymarket took sufficient steps to keep U.S. users off that platform as part of a broader investigation opened earlier this year, the people said. One of them said the current scrutiny is focused on the company's past controls and processes.

The agency is examining Polymarket's systems for determining customer location, along with its advertising activity in the United States, the people said. The CFTC is also scrutinizing Polymarket's U.S. platform, which the company began rolling out late last year, including customer onboarding procedures and customer protections.

Spokespeople for both the CFTC and Polymarket declined to comment. Investigations do not necessarily indicate wrongdoing, and many do not result in enforcement action.

Sector growth brings wider political and compliance pressure

The renewed examination raises fresh questions about why the CFTC and the Justice Department closed similar probes last year without bringing charges over possible breaches of the 2022 agreement, which resolved earlier CFTC allegations that Polymarket had operated unlawfully in the U.S. since its 2020 launch. A spokesperson for the Justice Department declined to comment.

Polymarket is based in New York and also has an offshore entity registered in Panama. The company has said it revamped its controls, expressly prohibits the use of virtual private networks, or VPNs, and maintains monitoring systems designed to prevent restricted users from accessing its offshore platform.

Prediction markets, which let traders bet on outcomes such as sports, elections and policy decisions, are growing quickly under policies seen as supportive during President Donald Trump's second administration. That expansion is also drawing criticism from Democratic lawmakers and advocacy groups concerned about potential insider trading risks, while recent political surprises, including in Brazil this week, are prompting broader questions about the platforms' accuracy.

Speaking to Reuters in August, Shana Bautista, Polymarket's global head of investigations and intelligence, said U.S. users circumventing the company's restrictions was not "a really prevalent issue."

Our earlier coverage of the Ibovespa (IBOV) highlighted a sharp post-election selloff in Brazil after President Luiz Inácio Lula da Silva’s re-election, including circuit breaker halts amid elevated uncertainty. We noted that the index fell below key moving averages and faced heavy selling pressure, while technical indicators sent mixed signals about whether the drop would extend or stabilize. The analysis pointed traders to major support and resistance levels as volatility and policy concerns continued to shape sentiment.

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