Polymarket Return to U.S. with $112m Acquisition

Join 4500+ Leaders in Web3 & Sports from brands like FIFA, NBA, Premier League, NHL, reading Sporting Crypto every week 👇️ 

Acquisition Overview 🎯

Polymarket have acquired QCX, a CFTC-licensed derivatives exchange, for $112 million, marking the prediction market platform's return to the U.S. This comes at a time when federal authorities have dropped their investigation into whether Polymarket violated their 2022 settlement agreement, which required the platform to block American users.

QCX received CFTC approval to operate in July 2024, two years after initially applying for their licence, providing Polymarket with the regulatory infrastructure they need to legally serve American users once again.

The deal comes after months of regulatory scrutiny, including the FBI's highly publicised raid on founder Shayne Coplan's New York home in November 2024. Polymarket dismissed this as "obvious political retribution," though the company's response highlighted the precarious position they found themselves in—operating in regulatory limbo whilst attracting massive global attention during the 2024 U.S. presidential election cycle.

Rather than continuing to operate offshore, Polymarket are buying compliance through acquisition. This mirrors the evolution we've seen with crypto exchanges, where platforms eventually recognise that sustainable growth requires regulatory clarity, rather than arbitrage.

The Stats Behind Polymarket 📊

The platform's total volume over the past 12 months hit $15 billion, with approximately $7 billion concentrated in the final quarter of 2024 during the election period. What's remarkable is how quickly sports filled the volume gap post-election, suggesting sustainable demand beyond political cycles.

Even before then, however, by November 2024, 50.9% of all event contracts on Polymarket were sports-related. Sports were already establishing themselves as a core vertical before the political betting frenzy reached its peak.

Fast forward to February 2025, sports became Polymarket's largest category by volume, just four months after representing only 17% of the platform's trading activity in November 2024.

The platform's lifetime sports-related contract volume has surpassed $6 billion, with the 2025 Super Bowl alone generating $1.1 billion in wagers, underscoring the big shift over the last 12 months from politics to sport.

Indeed, this is reflected in the company’s marketing strategy as well.

The X account ‘Polymarket FC’ was created, tapping into influencers and more to broaden reach, and eventually mimic viral, update-based content to appeal to a specific demographic.

This sports dominance positions Polymarket as a direct competitor to traditional betting exchanges. When you consider that Betfair Exchange process approximately £77 billion (~$100 billion) in matched volume annually, and global sports wagering reached $261 billion in 2023, Polymarket's sports volumes are becoming genuinely significant in the broader gambling ecosystem.

And not that many people are talking about it.

Analysis 🧠 

The biggest opportunity for a business like Polymarket is in the U.S.

And that is because of regulation.

The state-by-state approach taken to gambling, compared to the CFTC, federal regulation of event contracts (prediction markets), means that this is a sudden unlock to 100s of millions of users.

Kalshi and other prediction market products are already live in the U.S., but their volumes are dwarfed by Polymarket.

Indeed, Kalshi recently announced that their platform would now run 24/7 with weekly downtimes of 2 hours.

That has sparked some rumours that it’s a direct response to Polymarket coming onshore, which, of course, are 24/7 by default, being built on blockchain.

Indeed, by starting onshore, Kalshi have had to undertake dozens of legal battles against states in the U.S., triumphing in all of them to date. Feasibly, any suits against Polymarket will now have precedent, meaning they can piggyback off of Kalshi’s wins in court.

Concluding Thoughts 💭

(1) Regulation Through Acquisition

It's M&A season in crypto, but I don't think we've seen anything as pointed as this. Considering the price, I think this is a very cheap way for Polymarket to become compliant in the U.S. This regulation-by-acquisition strategy is likely to work precisely because they've built substantial volumes and user bases globally whilst operating offshore, then purchased legitimacy at a relatively modest cost.

(2) Mimicking Crypto Exchange Journeys

What we saw from 2017 until now was an aggressive expansion of offshore crypto exchanges, attracting liquidity from onshore participants.

Think Binance compared to Coinbase. C

oinbase were regulated onshore, based in the US, eventually publicly traded in the US, and were not able to take in some of this volume from offshore participants. Polymarket have grown their volumes greatly offshore, and now, going onshore, they can legally take in US participants. This regulation-by-acquisition strategy is very likely to work.

(3) State-by-State vs Federal

On a recent Sporting Crypto Podcast, Will Martin, CEO of Liveduel, explained:

"Having state by state is a crazy framework... It's just an absolute logistical nightmare. And what ends up happening is it kind of pulls up the ladder for innovation, because it's only the big guys that can follow all the rules."

Whether or not we think this is a crazy way to regulate, someone very smart somewhere has found this loophole between federal CFTC regulation and state-by-state gambling laws. Now that this Pandora's box has been opened, I don't think there's any way back for states to regulate things like Polymarket and Kalshi. The aggression we're seeing from Polymarket, Kalshi, Robinhood and Crypto[dot]com shows this window is one they want to take advantage of.

(4) Will Legal Battles Follow?

We've seen Kalshi in court numerous times, and they are, to this point, undefeated against states trying to sue them and claim their product is gambling. Even though most of these suits have failed, I do wonder if there will be many that go against Polymarket. I think there's a good chance states will find them a weaker opponent in court. However, because of Kalshi's wins in court, there is precedent for Polymarket to point to, and that's going to be very difficult for states to cope with.

(5) The Controversy Will Not Stop (nor help)

This is probably the most absurd headline I've ever ‘covered’ on Sporting Crypto, but recently, Polymarket were slammed for ‘disrespectful dildo-throwing bets’ after a second man was arrested at a WNBA game for throwing a sex toy. There was over half a million dollars in volume being traded on whether someone would do this at a WNBA game.

If you're encouraging illegal or baseline disrespectful behaviour, that's probably not going to get you any favours with regulators, media, or anyone within the world you want to impress—including sports, which have now become your biggest market.

Simultaneously, we've seen Polymarket struggle to get to the actual truth with specific markets. The best example is Ukraine President Zelensky having a market about whether he would wear a suit at his next White House visit. He turned up in something resembling almost a suit, which sparked frenzied wagering. Finding the actual yes/no truth of something like that is very difficult.

(6) Where these Markets are Unique

They can create liquid, high-volume markets in areas where bookmakers do not have an edge.

I.E, a player transferring from one football club to another, a bookmaker cannot take huge liabilities on because they have no edge, or no historical data to model against. It’s an event, just like an election, that people have a good idea about, but accurate forecasting is almost impossible.

(7) Are they really PvP?

Everyone presumes Polymarket is this egalitarian way of finding the source of truth—a place where it's person versus person. That's not necessarily the case. Market makers will become a bigger and more prominent part of Polymarket as volumes increase, and they have to because liquidity is spread thin across thousands of different markets. Market makers are out there to make money for themselves—they don't care about the result, they care about being on either side of the book to ensure they're making a margin.

That's sometimes not good for users, especially if market makers decide to remove liquidity from specific markets if they think the risk is too big. If they don't have the required data or risk modelling around specific markets, they may provide very little liquidity, or liquidity that may disadvantage users.

(8) Second mover advantage

I do wonder if we're seeing a second mover advantage in crypto, whether in specific geographies or markets. Polymarket currently have 4-5x the volume that Kalshi do, having incurred not that much legal cost compared to Kalshi in the US, and they have many more users. I do wonder what the battle will look like between Kalshi, Crypto[dot]com's event contracts, and Polymarket. We've seen Kalshi forced to go 24/7…because Polymarket are built on crypto rails. Kalshi have had to respond to them coming onshore, which is obviously what they need to do as a business.

(9) Another killer crypto use case

This is not what Robinhood is doing, because they are using Kalshi. But it’s still important to outline answers to ‘why crypto?’.

Crypto is important here because you can use smart contracts to automatically payout on predictions.

You can share in liquidity globally in permitted jurisdictions.

Settlement and payment are faster, cheaper, transparent and borderless.

It makes sense that crypto rails have caught on with prediction markets.

This is the second mainstream use case for crypto after stablecoins.

(10) Finance cares about prediction markets. So will everyone else. Sports included.

There is a demand for prediction markets. Consumers have spoken with their activity.

Media is using prediction markets to point to the ‘wisdom of the crowds’ probabilities in sports, politics and more.

TradFi Tomorrow: Paradigm

Indeed, even institutions who were asked in a recent survey by Paradigm voted Predictions Markets as 4th in ‘strategies that your organization implemented to manage or reduce costs in delivering financial services’.

The genie is out of the bottle, and it’s not incumbent on regulators to ensure consumers can participate safely.

More Sports & Web3 Stories

• DP World Tour tees up crypto era (Read more here)

• KDA3 and Berachain Named Global Blockchain Partners of SSC Napoli (Read more here)

General ‘Stuff’ that Could Impact You

• Harvard Reports $116M Stake in BlackRock’s iShares Bitcoin ETF in Latest Filing (Read more here)

• The SEC Launches "Project Crypto" (Read more here)

Thanks for reading the latest edition of the Sporting Crypto newsletter!

If you enjoyed this, please tell your friends who might be interested, and share it on socials.

Disclaimers

This newsletter is for informational purposes only and is not financial, business or legal advice. These are the author’s thoughts & opinions and do not represent the opinions of any other person, business, entity or sponsor. Any companies or projects mentioned are for illustrative purposes unless specified.

The contents of this newsletter should not be used in any public or private domain without the express permission of the author.

The contents of this newsletter should not be used for any commercial activity, for example - research report, consultancy activity, or paywalled article without the express permission of the author.

Please note, the services and products advertised by our sponsors (by use of terminology such as but not limited to; supported by, sponsored by or brought to you by) in this newsletter carry inherent risks and should not be regarded as completely safe or risk-free. Third-party entities provide these services and products, and we do not control, endorse, or guarantee the accuracy, efficacy, or safety of their offerings.

It's crucial to provide our readers with clear information regarding the inherent nature of services and products that might be covered in this newsletter, including those advertised by our sponsors from time to time. When you buy cryptoassets (including NFTs) your capital is at risk. Risks associated with cryptoassets include price volatility, loss of capital (the value of your cryptoassets could drop to zero), complexity, lack of regulation and lack of protection. Most service providers operating in the cryptoasset industry do not currently operate in a regulated industry. Therefore, please be aware that when you buy cryptoassets, you are not protected under financial compensation schemes and protections typically afforded to investors when dealing with regulated and authorised entities to operate as financial services firm.