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Polymarket Secures $45 Million from Peter Thiel and Vitalik Buterin to Fuel Election Betting Boom

Last Updated May 15, 2024 10:32 AM
Teuta Franjkovic
Last Updated May 15, 2024 10:32 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Peter Thiel’s Founders Fund has invested in Polymarket despite growing regulatory pressures from US authorities.
  • Polymarket has seen a significant increase in activity, with millions wagered on the presidential election.
  • Despite a CFTC fine and a cessation of US operations, Polymarket raised enough to continue to expand internationally.

Peter Thiel’s venture capital firm, Founders Fund, has invested  in Polymarket, one of the largest crypto-based prediction markets. This move comes in spite of increased scrutiny from US regulators.

The platform, which also includes Ethereum co-founder Vitalik Buterin among its backers, has seen a surge in user activity . At present, bets on the 2024 US presidential elections are its most popular contract.

Polymarket Secures $70 Million in Funding Amid Regulatory Challenges

Polymarket recently raised $70 million  over two funding rounds, with the latest round led by Founders Fund.

This influx of investment occurs as the US Commodity Futures Trading Commission (CFTC) intensifies its efforts to regulate such platforms. The CFTC is proposing a ban on trading derivatives betting on political and sporting events. Polymarket has faced previous actions  from the CFTC, resulting in a fine and an agreement to cease its services in the US. However, it continues to operate internationally.

Joey Krug, a partner at Founders Fund, attributed  some of the resistance to prediction markets in the US to what he considers outdated views on betting. He noted that, in the short to medium term, the CFTC’s proposal might benefit Polymarket, letting the platform focus on international markets. However, he believes that it would be a good thing in the long run for Americans to also take part in these markets.

Election betting has significantly boosted activity on Polymarket, with over $170 million placed on events related to the US elections . Even former President Donald Trump has cited Polymarket odds regarding his potential return to the White House.

Krug s aid:

“A lot of the reason why certain people don’t like prediction markets in the US kind of dates back to pretty puritanical thinking about betting. In the short- to mid-term it’s good for Polymarket because they are targeting non-US markets. In the long run, it will be good if Americans can participate in this market too.”

Record Betting on US Elections with Over $170 Million Wagered

Peter Thiel sees the rise of crypto as a challenge to traditional financial systems. The investment in Polymarket marks Founders Fund’s first foray into a platform specializing in event-betting contracts, as per Krug.

Also, in an effort to mend its relationship with regulators, Polymarket appointed  J. Christopher Giancarlo, a former head of the CFTC, as chairman of its advisory board following a regulatory settlement in 2022.

Late last year, analysts from Bitwise Investments predicted  a record $100 million would be staked on crypto-based prediction markets in 2024, with Polymarket being the dominant platform. A single contract on Polymarket has already beaten that forecast. More than $125 million in bets have been placed on the presidential election alone through Polymarket. In total, traders have wagered $202 million on the platform this year.

$45 Million Raised in Series B Led by Founders Fund

Led by 25-year-old Shayne Coplan, Polymarket allows users to trade on a variety of topics,. The platform offers bets on scenarios ranging from the frequency of Elon Musk’s posts on X  to the performance of GameStop’s stock . Users can buy dollar-backed stablecoin USDC to fund their share buys. Notably, Polymarket does not take custody of customer funds or digital tokens, instead promoting markets on the Ethereum blockchain.

A spokesperson for Polymarket said  that Founders Fund spearheaded a $45 million Series B funding round, following a $25 million Series A round supported by General Catalyst. Despite currently generating no revenue, the new funding has valued the company lower than before. Previous valuations, made before the CTFC took regulator action, approached nearly $1 billion.

In discussing the company’s focus on the US market and its research into investment potential, Coplan said  in an interview he does not expect immediate financial returns.

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