By Pritam Biswas
(Reuters) -The U.S. Commodity Futures Trading Commission on Wednesday approved Polymarket, the world’s largest prediction market, to relaunch in the country, more than three years after its exit.
The decision comes amid a debate in the financial sector, with some experts highlighting prediction markets as superior to traditional polls, while others argue that these markets are little more than “digital casinos”.
Polymarket allows users to profit from predictions on a wide range of events, including sports, entertainment, politics and the economy. Trading in such event contracts has surged in popularity since the U.S. presidential election last year.
The regulatory body’s decision follows Polymarket’s $112 million acquisition of QCEX, a CFTC-licensed derivatives exchange and clearinghouse, a move that provides the necessary framework for the company to operate legally in the U.S.
The CFTC issued a no-action letter granting relief to the derivatives exchange and clearinghouse on certain recordkeeping and reporting requirements for event contracts.
“The CFTC’s acting chair has previously referred to prediction markets as ‘an important new frontier’ and today’s decision certainly cements this sentiment,” said Nick Jones, founder of crypto firm Zumo. “Some on Wall Street now believe prediction markets could be bigger than the stock market one day.”
Polymarket is set to return to the U.S. more than three years after agreeing to block American users following a settlement with the CFTC for operating an unregistered derivatives trading platform.
Its return also follows peer Kalshi’s successful court challenge last year against CFTC, after which the latter gained approval to list contracts related to the White House race.
These markets have already gained investors’ interest, with Kalshi securing a $2 billion valuation from a $185 million raise earlier in the year. Polymarket also secured an investment last week from Donald Trump Jr-backed venture capital firm 1789 Capital.
(Reporting by Pritam Biswas in Bengaluru; Editing by Alan Barona)
