Despite being legally barred from using Polymarket, the decentralized prediction market platform, American users have traded approximately $571 million in political contracts over the past year—more than any other country, according to data from on-chain analytics firm Allium. This figure underscores the persistent demand among U.S. users for political betting, even as regulators have cracked down on such platforms. The finding raises questions about the effectiveness of current bans and the future regulatory landscape for prediction markets in the United States.
Polymarket is a blockchain-based platform that allows users to bet on the outcomes of real-world events, ranging from elections and sports to geopolitical conflicts. It uses smart contracts on the Ethereum network to settle bets and operates without a central intermediary. However, in 2022, Polymarket settled with the U.S. Commodity Futures Trading Commission (CFTC) for offering event contracts without registration. As part of the settlement, the platform agreed to block U.S. users and stop offering certain contracts. Despite this, the platform remains accessible to many Americans through VPNs and non-custodial wallets, making enforcement challenging.
Allium, a firm specializing in on-chain data analysis, examined blockchain transactions linked to Polymarket over the past year. It identified wallets with clear ties to the United States—such as those using U.S.-based IP addresses during identity verification or linked to American financial institutions. These wallets collectively traded $571 million in political event contracts, surpassing the combined volume from all other countries. This activity is particularly striking given that the platform officially prohibits U.S. residents from using its services.
The data also reveals distinct preferences among American traders. While Polymarket offers a wide array of markets, U.S. users disproportionately bet on geopolitics rather than domestic elections. Specifically, they heavily traded markets related to foreign wars and novelty events—areas where regulated U.S.-based prediction markets like Kalshi or PredictIt generally do not offer contracts. For example, markets on the Israel-Hamas conflict, the war in Ukraine, and potential military escalations drew significant volume from American wallets. This suggests that U.S. bettors are seeking outlets for political speculation that are not available through domestic platforms.
Regulated prediction markets in the United States, such as Kalshi and PredictIt, are subject to oversight by the CFTC. They are typically limited to certain categories of events, such as U.S. elections or economic indicators, and are often restricted from listing contracts on violence, war, or other sensitive topics. Polymarket, operating outside U.S. jurisdiction, faces fewer restrictions and can offer markets on a broader range of geopolitical events. This regulatory gap appears to be a key driver of American users' activity on Polymarket, as they seek to bet on outcomes that regulated exchanges avoid.
Interestingly, Allium's analysis found that U.S. traders are no better at predicting outcomes than their international counterparts. Their returns on investment are roughly in line with the global average, suggesting that the motivation is not superior skill but rather the availability of markets. This further indicates that the demand is driven by market access rather than any informational advantage.
The persistent activity of American users on Polymarket highlights a significant policy dilemma for U.S. regulators. On one hand, leaving these markets offshore means they operate without U.S. oversight, posing risks of manipulation, fraud, and unregulated gambling. On the other hand, bringing them onshore under a permissive regulatory framework could allow the CFTC to monitor and regulate them, potentially protecting consumers and ensuring market integrity. However, this would require a political and legal shift, as current U.S. law prohibits most event contracts, especially those involving political outcomes and hostilities.
Some experts argue that prohibition is ineffective and that a regulated market would channel demand away from unregulated platforms. Others worry that legalizing political betting could undermine democratic processes or create perverse incentives. The debate is ongoing, with no clear resolution in sight.
Polymarket's total trading volume across all markets exceeds several billion dollars, making the U.S.-related $571 million a substantial but not majority portion. The platform has seen explosive growth driven by major events like the 2024 U.S. presidential election and international conflicts. Despite the ban, American users have managed to find ways to participate, reflecting the difficulty of enforcing geographic restrictions in decentralized systems.
The decentralized nature of Polymarket makes enforcement of user bans particularly difficult. Unlike centralized platforms that can deny access from IP addresses or require KYC verification, Polymarket operates on the blockchain. While the front-end website attempts to block U.S. users, many Americans access the platform through VPNs or by interacting directly with the smart contracts via wallet interfaces. The platform also encourages identity verification for larger accounts, but this is not mandatory for smaller trades. As a result, a significant number of U.S. users remain active, often using workarounds that are difficult for regulators to police.
Among the most traded geopolitical markets by U.S. users are those related to the Israel-Hamas war. For instance, contracts on whether there will be a ceasefire by a certain date, or whether specific leaders will be assassinated, have attracted millions in bets. Similarly, the Ukraine-Russia war has generated numerous markets on territorial gains, peace talks, and NATO involvement. These high-stakes conflicts create a surge of interest from bettors eager to speculate on outcomes that have real-world consequences, yet are absent from domestic platforms due to regulatory constraints.
Novelty markets also appeal to American traders. Polymarket offers bets on bizarre events such as alien discoveries, celebrity arrests, or even the timing of Elon Musk's next tweet. While these may seem frivolous, they generate significant volume and reflect a broader appetite for speculative entertainment that U.S. platforms are hesitant to host.
The 2024 U.S. presidential election was one of the most actively traded events on Polymarket globally. However, Allium's data indicates that American users, as a share of their overall activity, were relatively less engaged in election markets compared to international users. Instead, they focused more on conflict-related contracts. This pattern suggests that U.S. bettors are turning to Polymarket specifically for markets that domestic platforms do not provide, rather than merely trying to circumvent restrictions on election betting.
The situation mirrors earlier challenges faced by offshore sportsbooks and online casinos, which for years accepted U.S. customers despite bans. The rise of blockchain technology has made such enforcement even more complex, as decentralized platforms are inherently borderless. Polymarket's case could set a precedent for how regulators handle decentralized finance (DeFi) applications that conflict with existing laws.
Following the 2022 CFTC settlement, Polymarket took steps to comply, including blocking IP addresses from the United States and requiring identity verification for users who wanted to trade more than a certain amount. However, these measures are not foolproof. Users can easily circumvent IP blocks through VPN services, and those who prefer to remain anonymous can use wallets that are not linked to their identity. Consequently, the volume attributed to U.S.-linked wallets remains substantial.
In contrast, regulated U.S. platforms like Kalshi and PredictIt must comply with strict rules. Kalshi, for instance, offers contracts on economic indicators, weather, and some political events, but it is prohibited from listing contracts on wars or violence. The CFTC has been cautious about expanding the range of permissible contracts, citing concerns about gambling and market manipulation. This cautious approach has created a vacuum that Polymarket and other offshore platforms fill.
Why do Americans risk money on these contracts, especially when they must go to extra lengths to participate? Behavioral economists suggest that prediction markets satisfy a human desire to express opinions and test one's judgment against others. The potential for profit is an added incentive, but many participants are motivated by the intellectual challenge and the excitement of predicting real-world outcomes. Moreover, the ability to trade continuously and adjust positions based on new information creates a dynamic that simple polls cannot replicate.
Prediction markets are not without controversy. Critics argue that they can be easily manipulated by wealthy individuals or organizations seeking to influence public perception. Since the markets are unregulated, there is little oversight to prevent insider trading or the spread of misinformation. For example, in the 2024 election cycle, there were allegations that some bets were placed to create a false appearance of momentum for certain candidates. Such concerns are amplified when the markets involve foreign conflicts, where sensitive information might be used for profit.
Despite these issues, many academics and economists view prediction markets as valuable tools for aggregating information. Researchers at the University of Iowa and other institutions have studied their accuracy, finding that they often outperform polls and expert analysis. The ability of markets to process diverse opinions in real-time makes them a promising method for forecasting, provided they are properly regulated. The Polymarket data reinforces the idea that, even when banned, such markets attract participants who believe in their predictive power.
As the 2026 midterm elections approach and global conflicts continue to simmer, the volume of U.S. activity on Polymarket is likely to increase. Regulatory clarity remains elusive, with the CFTC taking a mixed approach of enforcement against platforms while occasionally allowing limited experiments. Whether the U.S. will eventually embrace onshore prediction markets or continue to push them offshore remains an open question. For now, American traders are finding ways to participate, and the data shows they are a dominant force in the global prediction market ecosystem.
Source: Coindesk News