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.