Polymarket Faces Potential Ban in France After Raking in $3.5B from US Election: Report

France's National Gaming Authority is reportedly planning to block Polymarket, the blockchain-based prediction market platform that saw $3.5 billion in trading volume during the U.S. presidential election.

The regulator is "currently examining [Polymarket's] operation as well as its compliance with French gambling legislation," according to a report from French news outlet The Big Whale. 

Decrypt has reached out to Polymarket and the regulator for comment.

Regulatory scrutiny emerged after a French trader known as Theo placed multimillion-dollar bets on Donald Trump's victory, ultimately earning a $47 million payout when the former president secured a second term, the report reads. 

A prior report from Reuters two weeks before election day first identified Théo.

Prospects of the ban are grounded on the regulator’s authority to restrict access and block domain names. Pressure towards media outlets that link to the platform can also be applied, the report claims.

According to Reuters, Polymarket claimed to have contacted Théo, citing his extensive trading experience and a background in financial services. Polymarket said it conducted an investigation which concluded that the trader was betting based on their "personal views" on politics.

The massive wagers initially sparked manipulation concerns before the bettor revealed his identity to the Wall Street Journal, confirming that they placed over $30 million in bets over the U.S. elections.

While ANJ can implement technical restrictions, users may still access the platform through VPNs since Polymarket only requires a crypto wallet rather than identity verification. The regulator has not announced a timeline for the potential ban.

Polymarket has faced mounting regulatory pressure globally, with the U.S. Commodity Futures Trading Commission probing the platform as early as 2021. The commission later proposed rules targeting prediction markets in a bid to counter manipulation risks. 

Despite this, prediction markets continue to attract billions of dollars in bets, with concerns over the effects of insider trading. Polymarket raised $74 million from early investors, including Ethereum co-founder Vitalik Buterin, though it remains inaccessible to US users.

The platform processed over $294 million in trading volume on November 5 alone as users wagered on election outcomes. Unlike traditional betting sites, Polymarket operates on blockchain technology, allowing users to place crypto bets without intermediaries. 

The company currently maintains control over betting proposals, though this could change if the project decentralizes through a token launch.

Despite skepticism about its predictive value, Polymarket correctly signaled both Biden's withdrawal from the presidential race and Trump's victory weeks before the events occurred.

Edited by Sebastian Sinclair