Is Polymarket in trouble?

Polymarket is one of the world’s most popular betting sites. The decentralized prediction market platform, as they like to call themselves, introduced an innovative method based on blockchain technology. 

However, it started running into trouble in various countries due to regulatory scrutiny and financial regulations. Earlier this year, Belgium became the fourth country to officially restrict access to Polymarket. The news from Belgium could indicate much larger issues brewing, as EU regulators start to take notice of Polymarket practices and could decide to ban it entirely from Europe. 

Regulatory Concerns and Legal Issues Plague Polymarket

Polymarket faces a host of regulatory and legal issues in various countries across the globe. For the most part, many of the host countries don’t have any regulations regarding prediction markets. This has allowed Polymarket to operate in a gray area, but that is not something that is likely to continue. 

One of the reasons is taxation. Some claim that Polymarket winnings are subject to the UK crypto tax, something Polymarket has vehemently denied. The issue will most likely end up in court, meaning it may take some time to conclude. 

In general, crypto betting, or predictions as Polymarket likes to call it, is a mostly unregulated area. But even in those countries that have rules in place about it, Polymarket managed to step on so many toes that its continued operations seem unlikely. 

Recently, the organization landed in hot water in California when it launched betting markets on wildfires that devastated the Golden State. A representative from the company expressed regret, saying: "We extend our heartfelt sympathies to all those impacted by these fires and commend the brave efforts of first responders and the local community." 

However, the statement didn’t earn them much sympathy. The media continued to lambast them, with Los Angeles Times columnist Bill Shaikin saying: "The statement rings hollow while individuals continue to place bets on the misfortunes of ordinary Angelenos. Polymarket should remove these wildfire odds. Those six historic words from 1954 remain relevant today: Have you no sense of decency?"

Crypto Gambling and Unregulated Betting 

Crypto gambling has been facing a lot of scrutiny lately as more and more countries seek to impose firmer regulations on the market. Although strictly speaking, Polymarket isn’t a pure crypto gambling site, most regulators ignore this distinction and paint them with the same brush. Due to this, the company is now facing concerns over financial security, fraud, and addiction.

The lack of legal consumer protections is one of the issues that Polymarket needs to address to avoid accusations of shady practices. Another is a growing number of people addicted to gambling, especially minors and young adults. The platform will need to introduce a comprehensive program of prevention if it is to have any chance of continuing its operation in developed markets.

Polymarket Faces Accusations of Political Manipulation

Polymarket became known to the general public when it started taking massive bets on the outcome of the US presidential election in 2024. The company was accused of political manipulation as several individuals placed large bets on Donald Trump’s victory, thus swinging the odds in his favor. Its $2.7 billion betting pool predicted Trump’s victory with 66%. 

However, the analyses by blockchain experts showed that nearly one-third of these bets may be due to wash trading. The analyses cast doubt over Polymarket’s impartiality and demonstrated the company’s shocking lack of transparency.

More importantly, Polymarket seemingly failed to learn anything from that incident, as it faced backlash over its betting practices regarding the Ukrainian mineral deal. 

Conclusion

As Polymarket tries to thread a needle of regulatory scrutiny, its future remains murky at best. The company’s readiness to face various issues will determine whether it will continue to operate within the legal frame more and more countries are imposing on it. However, it is still unclear whether it possesses the expertise or even the will to do so.