Four years after being forced out of the American market, Polymarket is reportedly in discussions with the CFTC about a full domestic return. The timing could not be more politically charged.
Polymarket is reportedly moving to close the chapter on its four-year absence from the American market, engaging directly with the CFTC about allowing US users back onto its primary exchange. The discussions, which have been underway for at least several weeks, represent the most significant strategic shift the blockchain-based prediction market operator has attempted since its 2022 regulatory settlement forced it to block domestic users and shift its core operations offshore.
The background to that exile is well established. Polymarket reached a settlement with the CFTC in 2022 over violations of registration requirements, paying a $1.4 million penalty and agreeing to restrict US customer access. The platform subsequently decentralised its structure, built out its international user base and became the largest prediction market operator in the world by trading volume, all while remaining off-limits to American consumers. That combination of global scale and domestic absence has defined Polymarket's competitive position ever since.
The attempt to correct that imbalance is understandable given how dramatically the US prediction markets landscape has shifted. Kalshi, which maintained its US operations throughout and invested heavily in regulatory compliance and domestic brand building, has capitalised on its first-mover advantage in the American market. With Polymarket's global trading volumes and the $400 million fundraising round reportedly underway at a $15 billion valuation, the commercial logic of remaining excluded from the world's largest consumer market becomes increasingly difficult to justify.
The regulatory pathway for a return is clearer now than it has been at any point since 2022. Polymarket already holds the infrastructure for a compliant US operation through Polymarket US, the platform built around its $112 million acquisition of CFTC-licensed exchange QCEX. That vehicle, which carries Designated Contract Market status, was intended to serve as the foundation for a regulated domestic re-entry. In practice, it has remained in beta with limited activity, concentrating on sports-related contracts while outlining broader ambitions across climate data, digital assets and election outcomes that have not yet materialised at scale.
A formal CFTC vote would be required to remove the restriction on US users accessing the main exchange, but the current composition of the commission makes that process less procedurally complex than it might otherwise be. With all commission seats except one currently occupied, effective decision-making authority is concentrated in chairman Michael Selig, who has consistently argued for expanding federal oversight of prediction markets and positioned the CFTC as the appropriate and exclusive regulator for the sector. Whether Selig moves quickly on Polymarket's application or treats it as one element of a broader rulemaking process remains unclear.
The political dimension of the prediction markets industry has become more visible in recent months. Donald Trump Jr. holds advisory roles with both Polymarket and Kalshi and has invested in Polymarket through 1789 Capital. Trump Media and Technology Group has separately signalled its intention to launch its own prediction market platform, adding a further layer of political connectivity to a sector already operating at the intersection of finance, gambling regulation and federal jurisdiction disputes.
How Polymarket's international exchange would interact with the existing Polymarket US entity if a full domestic return is approved remains an open structural question. Whether the two operations converge into a single platform or continue as separate entities targeting different regulatory frameworks may ultimately be determined by the terms of any CFTC approval rather than by Polymarket's own strategic preferences.
The CFTC Chairman's Centralised Power Changes the Approval Dynamic Entirely
Under normal commission composition, a formal vote on an application of this significance would involve multiple commissioners with potentially divergent views, a public comment period and a deliberative process that could take months or years. The current vacancy situation concentrates that authority in a single individual who has already demonstrated strong ideological alignment with the prediction markets industry's preferred regulatory framework. That does not guarantee a quick or unconditional approval, but it removes the most significant procedural obstacle to a rapid decision. Operators, investors and state regulators watching this process should be aware that the timeline for a Polymarket US re-entry may be considerably shorter than historical CFTC precedent would suggest.
Polymarket's Return Would Fundamentally Reshape the Domestic Competition
Kalshi has built its US market position during a period when its most formidable global competitor was absent. A Polymarket primary exchange operating in the US market would introduce a competitor with vastly greater brand recognition internationally, a deeper liquidity pool and a user base accustomed to the breadth and variety of markets the platform offers. The competitive pressure this would place on Kalshi, DraftKings' prediction offering and Flutter's FanDuel Predicts would be substantial. It would also accelerate the industry's consolidation dynamic, as smaller domestic prediction market platforms without comparable scale or regulatory infrastructure would find it increasingly difficult to compete against two well-capitalised, federally licensed operators fighting for the same customer base.
The Political Connectivity Is a Double-Edged Sword
Donald Trump Jr.'s advisory and investment relationships with both Polymarket and Kalshi, combined with Trump Media's own platform ambitions, create a political environment that is currently highly favourable for the prediction markets industry at the federal level. A CFTC chairman appointed under the current administration pursuing an aggressive expansion of federal prediction market oversight aligns neatly with those interests. But political protection of this kind is inherently contingent and potentially counterproductive. If the prediction markets industry becomes too visibly associated with specific political interests, it risks losing the cross-party legitimacy it would need to sustain its regulatory gains through future administrations. The congressional hearing earlier this month demonstrated that scepticism about prediction markets is bipartisan. Building a durable regulatory framework requires winning that argument on its merits, not just under favourable political conditions.
iGaming Times analysis: Polymarket's return talks reframe the prediction-markets-vs-sports-betting debate. If the main exchange operates under the CFTC commodity-derivatives framework rather than state gambling licences, it sidesteps the patchwork sportsbook regulatory regime entirely. The strategic question for state regulators isn't whether to allow Polymarket — it's whether prediction markets carved out under federal commodity rules cannibalise the addressable market they've spent years bringing inside their licensing perimeter. Expect aggressive state-level pushback if a return materialises.
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