Americans have been trading hundreds of millions of dollars in political bets on the decentralized prediction platform Polymarket, even though the platform is legally barred from serving US users. According to data from on-chain analytics firm Allium, wallets linked to the United States executed approximately $571 million in political contract trades over the past twelve months—more than any other country in the world.
Polymarket, which operates on the Polygon blockchain, allows users to buy and sell shares in the outcomes of real-world events, ranging from election results to geopolitical conflicts. The platform gained mainstream attention during the 2020 US presidential election but later faced regulatory scrutiny from the Commodity Futures Trading Commission (CFTC). In 2022, Polymarket settled with the CFTC for $1.4 million and agreed to block US users from accessing its platform. However, the latest data suggests that enforcement has been far from airtight.
Why Americans are still trading on Polymarket
Allium's analysis traced the origin of wallet addresses and identified US-linked wallets as the most active group on the platform. Between mid-2023 and mid-2024, these wallets accounted for more than a third of all political trading volume on Polymarket. The total volume across all countries during that period was around $1.5 billion, meaning US participants contributed nearly 38% of the activity.
The data revealed an interesting pattern: American traders on Polymarket do not focus primarily on US domestic politics. Instead, they place a disproportionately high number of bets on foreign geopolitical events, such as the ongoing war in Ukraine, conflicts in the Middle East, and elections in other countries. Allium noted that US wallets were particularly active in markets related to “wars and foreign conflicts,” which are typically not offered on regulated US-based prediction platforms like PredictIt or the Iowa Electronic Markets.
This behavior suggests that US users are turning to Polymarket to access markets that are either unavailable or restricted in their home country. Regulated US platforms often shy away from listing contracts on sensitive topics like foreign conflicts or assassination attempts, leaving a gap that decentralized, offshore platforms can fill.
Regulatory dilemma and enforcement challenges
The findings highlight a persistent challenge for US regulators. Despite the CFTC's settlement with Polymarket and the platform's stated compliance measures, determined users can still bypass geo-blocking through VPNs and other methods. Polymarket does not require identity verification for most users, making it difficult to enforce geographic restrictions.
Allium's lead analyst, who spoke on condition of anonymity due to the sensitivity of the data, said: “The numbers show that US traders are not only participating but are actually the most active demographic. This poses a real question for policymakers: do you bring these markets under regulatory oversight, or do you continue to force them offshore where there is no consumer protection?”
The analysis also examined the accuracy of US traders compared to those from other countries. Surprisingly, American users did not show a statistically significant edge in predicting outcomes. Their win rates were roughly in line with the global average, suggesting that their activity is driven more by appetite for risk and desire for novel betting opportunities rather than informational advantages.
Broader implications for prediction markets
Polymarket's popularity among US users is part of a larger trend. Prediction markets have long been touted by economists and futurists as tools for aggregating information and forecasting events. They have been studied for their accuracy, with some research showing that they can outperform polls in predicting election results. However, legal hurdles in the United States have prevented most prediction markets from operating freely.
The CFTC has taken a cautious stance, classifying many event-based contracts as “binary options” that fall under its jurisdiction. This has led to a patchwork of regulation where some markets are allowed (like those on agricultural commodities) while others are not. The agency has also expressed concern about the potential for market manipulation and the moral hazard of betting on tragic events.
But the persistent flow of American money to Polymarket suggests that demand remains high. Proponents argue that bringing prediction markets under a regulated framework would provide better consumer protections, prevent fraud, and generate tax revenue. Critics counter that legalizing such markets could lead to increased gambling addiction and conflicts of interest.
How Polymarket works and why it's hard to block
Polymarket uses smart contracts on the Ethereum-based Polygon network to create decentralized markets. Users can buy and sell “shares” in outcomes using USDC, a stablecoin pegged to the US dollar. When an event is resolved, the smart contract automatically pays out winners. The platform charges a small fee on trades.
Because the core operations run on a blockchain, it is difficult for authorities to shut down the platform entirely. Attempts to block the website can be circumvented with alternative domain names or VPNs. While the CFTC settlement required Polymarket to implement IP blocking and geofencing, these measures are not foolproof. Many users report that they can still access the site using a VPN with an exit node outside the US.
This cat-and-mouse game is familiar to regulators of online gambling and cryptocurrency exchanges. The decentralized nature of Polymarket makes it resistant to traditional enforcement actions, and the platform has no central office or bank accounts that can be easily seized.
The role of Allium and on-chain analytics
Allium is a blockchain data platform that provides analytics to financial institutions and researchers. Its ability to trace the geographic origin of wallets is based on clustering algorithms that link wallet addresses to known exchanges, IP addresses, and other metadata. While not perfect, these methods can identify patterns with high confidence.
In this case, Allium classified wallets as “US-linked” if they had been funded from US-based exchanges or had other clear indicators of American origin. The firm claims that its methodology is reliable enough to draw meaningful conclusions about cross-border flows of capital in prediction markets.
The data also showed that US trading on Polymarket is highly concentrated. The top 10% of US wallets accounted for more than 80% of the volume, suggesting that a relatively small number of sophisticated traders are responsible for the bulk of activity. These “whales” may be using Polymarket for hedging purposes or as part of a larger trading strategy.
Comparisons with other prediction platforms
For context, the regulated US prediction market PredictIt has handled a total volume of around $100 million since its inception, far less than Polymarket's single-year figure for US users alone. The Iowa Electronic Markets, another academic platform, also operates at a smaller scale. This disparity underscores how much demand is flowing offshore.
Internationally, platforms like Augur and Kalshi (which is US-based but focuses on CFTC-approved contracts) have also seen varying levels of adoption. However, Polymarket remains the dominant player in terms of volume and user engagement.
The rise of Polymarket has even caught the attention of political campaigns. In 2024, some candidates began referencing Polymarket odds in their speeches and fundraising emails, treating the platform as a sort of real-time referendum on their chances. This has further blurred the line between legitimate forecasting and gambling.
What the future holds
As the 2026 US midterm elections approach, the debate over prediction markets is likely to intensify. The CFTC has signaled that it may revisit its rules on event contracts, potentially opening the door for regulated platforms to offer a wider range of markets. However, any change will require navigating a complex legal landscape and balancing competing interests.
Meanwhile, Polymarket continues to operate in a grey area. The platform recently raised additional venture capital funding and has expanded into sports and entertainment betting. Its founders argue that they are providing a valuable public good by aggregating information and giving the public a stake in global events.
For now, the data from Allium serves as a stark reminder that prohibition does not eliminate demand—it simply drives it underground. The $571 million traded by Americans on Polymarket is likely just the tip of the iceberg, with many users taking extra precautions to hide their activity. Whether regulators choose to crack down harder or adapt their approach will have lasting implications for the future of prediction markets in the United States.
Source: Coindesk News