US Election Betting Goes Viral: But Is The CFTC About To Shut Down Polymarket?

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It is now less than two months before Americans go to the ballots.

If the events of the past few months are anything to go by, then it is emerging that there will be a lot at stake.

Donald Trump is taking on Kamala Harris, the current vice president.

Who Will Take The Crown In November: Trump Or Harris?

Depending on which poll you are looking at, some show that Harris is leading.

Others show that the former president, Trump , will win by a big margin.

This is where the confusion is, and betting platforms make it even harder for those following this hotly-charged presidential campaign.

While election betting is nothing new, the emergence of crypto-based and decentralized prediction markets operating away from the US soil is proving to be more fascinating and a game changer.

Now, Americans can wager real money on election outcomes and win. Interesting as this may be, Polymarket and Kalshi, two of the top decentralized prediction markets, experts claim, are operating in a legal grey area, brushing US regulators, especially the Commodity Futures Trading Commission (CFTC), the wrong way.

The question is, will the CFTC act?

CFTC Is Watching Polymarket

Last week, CFTC Chair Rostin Behnam said they were closely monitoring not only Polymarket but also other gambling offshore platforms.

Under the Commodity Exchange Act of the US, the CFTC can regulate all prediction markets in the country.

The act empowers the CFTC to ban any activity that it deems operates contrary to the public interest, and one of them is gambling, even on elections result.

They argue that such activities undermine democratic activities.

Popular as Polymarket may be, the commission said it was watching any activity from these platforms, especially if they offer services to Americans–even if it is legally; away from the country.

If their influence becomes too pronounced at any time, the CFTC will issue an enforcement action, especially if they don’t adhere to their high regulatory standards.

Nonetheless, it won’t be the first time. In 2022, they paid $1.4 million as a settlement with the CFTC for failing to register with the commission. The settlement also saw Polymarket halt its operations in the country.

Thus far, Polymarket has not registered its derivatives contracts. Although it continues to generate millions of dollars in betting volumes, with the Trump-Harris betting markets being some of the largest, any action from the CFTC could be a blow to Polymarket.

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The Good News

While there are risks of Polymarket being forced out of America, there are other regulatory developments happening.

Recently, a federal judge agreed with Kalshi, a predictions market platform and Polymarket’s competitor, that the CFTC was overstepping its mandate.

Specifically, Kalshi argued that the CFTC was overstepping its bounds whenever it barred its US clients from betting on whether the Democrats or Republicans would control Congress.  

The ruling is massive for the industry and effectively slows the CFTC’s ability to over-regulate the predictions market.

What remains for now is whether Polymarket–which is not registered with the CFTC– will seek to re-enter the US market.

Crypto enthusiasts will be monitoring their actions, especially now that Trump and Harris have promised to support crypto and emerging technologies.

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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.