Polymarket discusses lifting its U.S. ban with the CFTC after a $1.4M settlement, aiming to reenter the domestic prediction market sector.
Prediction Market
Polymarket has been discussing the removal of its U.S. user ban with officials of the Commodity Futures Trading Commission over the past several weeks, Bloomberg reported Tuesday, citing people familiar with the matter. The ban has been in place since 2022, when the platform settled with the CFTC over allegations of offering illicit binary options contracts and agreed to pay a $1.4 million fine.
The discussions involve combining Polymarket's primary blockchain-based exchange with the domestic licenses held by its U.S. entity, and operating solely on the blockchain-based platform going forward. Polymarket US, which operates as QCX LLC, was cleared by the CFTC last November following the company's acquisition of a registered derivatives exchange. That domestic platform has not yet fully launched.
Any formal lifting of the U.S. ban would require a vote by the CFTC commission. That process may be less complicated at present, as four of the agency's five commissioner seats are currently vacant. CFTC Chair Michael Selig is the only sitting commissioner, a situation that has prompted concern among some lawmakers over the concentration of decision-making authority.
Selig has been at the center of prediction market policy in recent months. He has pursued rulemaking in the sector and mounted legal challenges against multiple states that have moved to restrict prediction market platforms. The CFTC filed suit against New York last week and has previously sued Arizona, Connecticut, and Illinois, with Selig asserting that federal jurisdiction over these markets is exclusive.
Prediction markets allow users to trade contracts tied to future events, including elections, economic data, and sports outcomes. Several U.S. states have argued that these platforms function as unlicensed gambling operations, a position the CFTC has rejected.
A successful return to the full U.S. market would allow Polymarket to compete more directly with Kalshi, which already operates domestically under CFTC oversight. The Justice Department dropped a separate investigation into Polymarket last year, reducing one significant layer of legal exposure ahead of the current talks.
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