(Bloomberg) -- France’s gambling regulator is examining the operations of cryptocurrency-based prediction markets platform Polymarket to see if it complies with its rules following a surge in user demand around the US presidential election.
The scrutiny comes after a pseudonymous trader, identified by Polymarket as a French national, made large bets using four separate accounts on the platform in favor of Donald Trump winning the race.
Research by blockchain analytics platform Chainalysis showed that the trader — known under the username Fredi9999 — may operate as many as 11 accounts, with a total expected profit of more than $85 million. An earlier estimate by Bloomberg News had originally calculated a $48 million profit across the four accounts that had initially been identified.
Online gambling is tightly regulated in France, although betting on sports and in poker games is permitted. Operating any new gambling market is subject to prior authorization from the ANJ, according to a government website.
“We are aware of this site and are currently examining its operation and compliance with French gambling legislation,” an Autorité Nationale des Jeux spokesperson for the regulator told Bloomberg News on Thursday. The ANJ is expected to ban access to Polymarket for French users, crypto news outlet The Big Whale reported late Wednesday.
A Polymarket spokesperson didn’t immediately provide an on-the-record response to questions from Bloomberg News.
US Users Banned
Trading on New York-based Polymarket skyrocketed this year as the race for the White House drew in bettors. Wagers on which candidate would be the next president — its most popular market — produced almost $3.7 billion in volume, according to Polymarket data. Throughout the final months of the campaign, Polymarket’s odds on a Trump win were consistently above those in regular polls.
Polymarket isn’t available to US users, following a 2022 settlement with the US Commodity Futures Trading Commission in which the platform was accused of providing illegal gambling services. Despite that, American traders flocked to its election markets, Bloomberg reported earlier this year. In practice, Polymarket’s system for blocking US users can be circumvented by using virtual private networks, and social media is full of instructions on how to do it.
As election betting volumes ramped up last month, Polymarket began conducting fresh checks to verify that big spenders on its platform were based outside of the US, Bloomberg News reported. Meanwhile, a September court victory for rival Kalshi Inc. over the CFTC allowed that platform and others like Robinhood Markets Inc. to begin offering local election contracts.
On Polymarket, traders use cryptocurrency to buy what it calls “yes” or “no” shares tracking a particular outcome. The amount of buying and selling of those instruments then determines the implied probability of each outcome at any point in time. The platform displays profits under each account’s positions, which represent the difference between the price of the shares when they were bought and a $1-per-share payout.
(Updates third paragraph to reflect new Chainalysis research on the trader’s accounts)
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