Polymarket’s Future at Risk? Democrats Push for CFTC Crackdown on US Election Gambling

Key Takeaways

• Election betting has seen a resurgence, driven by platforms like Polymarket that have experienced explosive growth due to major political events.
• Senator Jeff Merkley and his Democratic allies proposed banning all electoral betting to preserve electoral integrity.
• A potential ban on election betting by the CFTC could severely impact platforms like Polymarket.

Senator Jeff Merkley and his Democratic allies, including Senator Elizabeth Warren, have launched a collective effort to tackle election gambling following the explosive growth of crypto prediction platforms like Polymarket, which recently surpassed $1 billion in betting volume.

The push for a ban comes amid mounting fears that such betting could erode electoral integrity and jeopardize public trust in the democratic process.

Polymarket’s Influence and the Political Climate

In his letter , Senator Merkley stressed the threat the U.S. faces from foreign actors meddling with the elections.

The legislative group urged the Commodity Futures Trading Commission (CFTC) to prohibit all forms of electoral wagers, citing the risk of billionaires and political insiders using their resources and information to skew the elections.

Although not explicitly mentioned in the letter, Polymarket  is widely seen as a key factor behind this legislative push due to its remarkable success.

Polymarket has recently emerged as a dominant force in the crypto prediction market, outpacing well-known DeFi platforms like Uniswap and dYdX in terms of users.

Polymarket, a Dominant Force

Despite being based in New York, Polymarket remains off-limits to American users due to its contentious relationship with the CFTC. 

In 2022, the regulator fined the platform  $1.4 million for offering illegal trading services. As part of the settlement, Polymarket agreed to cease its U.S. operations while continuing to function internationally.

If the CFTC approves the ban, it could severely impact Polymarket and set a precedent for other platforms involved in election-related betting, potentially stifling a lucrative segment of the crypto market.

Nevertheless, Polymarket has seen its trading volumes surge exponentially even without U.S. users.

The platform’s transaction volumes jumped from $63 million in May to over $1 billion by the end of July, driven by heightened interest in the U.S. presidential elections. 

Recent events, including the assassination attempt on Republican nominee Donald Trump and Kamala Harris’ nomination, have significantly fueled betting activity on the platform.

At press time, users bet over $366 million on the winner of the November election.

About the Author

Teuta Franjkovic

Teuta is a seasoned writer and editor with more than 15 years of experience. She has expertise in covering macroeconomics and technology as well as the cryptocurrency and blockchain industries. She has worked for several publications as a journalist and editor, including Forbes, Bloomberg, CoinTelegraph, Coin Rivet, CoinSpeaker, VRWorld and Arcane Bear. Teuta began her professional career in 2005, working as a lifestyle writer at Cosmopolitan in Croatia. From there, she branched out to several other publications, covering mainly business and the economy. She then turned her attention to the world of cryptocurrency and blockchain, believing that crypto is among the most important inventions in the history of humanity. Her involvement in fintech began in 2014 and she has since lent her expertise in writing, editing and gathering information about the world of crypto, blockchain, NFTs and Web3. An all-round news hound, mentor, editor, and writer, Teuta enjoys teamwork and good communication. She holds a WSET2 diploma and has a thing for chablis, punkrock music and shoes. She also holds a double MA in Political science and Entrepreneurship.

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