The 2024 election is complete, but legal issues surrounding election betting appear far from over.
The Federal Bureau of Investigation raided the Manhattan home of Polymarket CEO Shayne Coplan on Wednesday, according to a Wall Street Journal report.
The federal government seized Coplan’s phone and other electronic devices as part of a U.S. Justice Department investigation into whether the crypto-based prediction platform accepted trades from U.S. customers.
The unregulated site that allows customers to make betting-like trades on events is currently banned in the U.S. by the Commodity Futures Trading Commission (CFTC), but users reportedly bypassed the block by using a virtual private network (VPN).
A Polymarket spokesperson told the WSJ that the seizure was “political retribution” from President Joe Biden’s administration.
Weighing in
Coplan called it a “last-ditch effort to go after companies they deem to be associated with political opponents" in a post on social media site X.
“We are deeply committed to being non-partisan, and today is no different, but the incumbents should do some self-reflecting and recognize that taking a more pro-business, pro-startup approach may be what would have changed their fate this election,” Coplan wrote. “Polymarket has provided value to 10s of millions of people this election cycle, while causing harm to nobody. We're deeply proud of that. I'm also proud to say that the future of America, and in particular American entrepreneurship, has never been brighter.”
It’s discouraging that the current administration would seek a last-ditch effort to go after companies they deem to be associated with political opponents. We are deeply committed to being non-partisan, and today is no different, but the incumbents should do some self-reflecting…
— Shayne Coplan ? (@shayne_coplan) November 13, 2024
Buzz in the market
Polymarket created a ton of buzz this election season with some of the most accurate predictions of the Presidential race between Donald Trump and Kamala Harris, as well as the amount of money accepted in trades globally.
Analysts and polls projected a much closer race than Polymarket, which favored Trump at 56% a day before the Nov. 5 election while other predictors saw it as more of a coin flip. In the process, Trump easily won enough electoral votes, sweeping all seven battleground states on the way to his second Presidential term.
Polymarket reportedly took in more than $3.7 million in election bets and paid out around $278 million. A French “whale” was due $85 million from trades placed on a Trump victory.
Banned by CFTC
Coplan created Polymarket in 2020 to serve as an outcome-based trading platform similar to sportsbooks. Users can fund their accounts through cryptocurrency and purchase trades that act like wagers, paying out one cent to one dollar based on the outcome of events like Friday’s Mike Tyson-Jake Paul fight and whether or not Bitcoin will hit $100K.
The CFTC banned Polymarket from U.S. access in 2022 for “offering off-exchange event-based binary options contracts and failure to obtain designation as a designated contract market (DCM) or registration as a swap execution facility (SEF).”
France is also looking into banning Polymarket following the election.
Prior to the election, prediction-outcome platform Kalshi won a court ruling to allow election betting in the U.S., recording wagers from more than 40,000 bettors and paying out $159 million on Trump’s victory, despite pushback from the CFTC.
