France Considers Ban on Crypto Betting Platform Polymarket
As crypto markets continue to expand, regulators are playing whack-a-mole with the industry. Cryptocurrency has permeated several aspects of human life, and of course, this continues to trigger new attempts to regulate the industry. The impact of the crypto betting platform Polymarket on the just-concluded US elections has led France to consider another move towards regulation. Is France’s move another attempt to stifle the growth of the industry or a necessity to protect its financial markets? Let’s take a look at the facts.
Polymarket is the world’s largest prediction market, and many of its users are walking away with more money than they came in with based on their predictions on the just-concluded elections. Polymarket is a decentralized cryptocurrency-based betting platform that allows users to place bets on the outcomes of real-world events in several subjects, such as politics and economics.
What separates Polymarket from being regarded as gambling outright, like online casinos, is that it is based on real-world events and covers a wider range of subjects. Users stake on real-world event outcomes like election results or economic trends. In contrast, crypto casinos like luckyblock offer games of chance, such as slots and blackjack, where players play against the house for a chance to win and also earn bonuses. It is probably this distinction that helped the company stay under the radar for as long as it has.
Polymarket, launched in 2020, has become more popular following the last US presidential election cycle, with the platform reaching over $6 billion in trading volume. Amidst this new wave of attention, the National Gaming Authority of France, the Autorité nationale des jeux (ANJ), has said it is investigating Polymarket’s compliance with the national gambling laws. A possible consequence of this investigation could be a complete ban on the platform in France.
Polymarket had been on the regulator’s radar before the elections; however, when a trader on the platform, who is allegedly a French national, placed bets worth about $20 million on Trump winning the election and is expected to rake in nearly $50 million as profits, the magnifying lens came out again. Polymarket’s activities border on betting, placing the platform within the domain of the ANJ. A spokesperson of the regulator has been quoted as saying: “We are familiar with this site and are currently examining its operation and its compliance with French legislation on gambling.”
Notably, it is not only in the French market that the platform has hit a regulatory roadblock. In 2022, Polymarket was fined US$1.4 million by the Commodity Futures Trading Commission (CFTC) and received a cease and desist order for regulatory violations, including failure to register as a Swap Execution Facility. Even though Polymarket is headquartered in New York, it does not offer its services to US citizens due to restrictions on political gambling. The CFTC has cited concerns that political gambling could undermine the electoral process and democracy in calling for a complete ban on all forms of electoral betting products.
Whichever way France chooses to regulate the platform, it should take a cue from the fact that despite restrictions placed on US citizens, the platform still featured prominently in the presidential elections, with many users considering it a reliable source for determining new trends during the elections.
