Homeward bound
Breaking: Polymarket sets the seal on US return with QCEX buy
Previously offshore prediction markets operator buys it’s way back to the US via $112m acquisition of CFTC-licensed exchange and clearinghouse.
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Coming home
On our way back home: Polymarket has announced the acquisition of CFTC-licensed exchange and clearinghouse QCEX for $112m, buying its way back into the US market a matter of days after it received the news that the twin federal probes launched during the Biden administration had been dropped.
“I‘ve waited a long time to say this: Polymarket is coming home,” CEO Shayne Coplan posted on X.
Home away from home: Polymarket has blocked access to US customers since 2022, following a settlement with the CFTC, which accused the company of running an unregistered derivatives-trading platform.
In November, federal agents raided Coplan’s Manhattan apartment demanding his phone and other electronic devices.
Earlier this month, the company was reported to have received formal notice from the US Justice Department and the CFTC that the probes had ended.
Defining: The company said in a press release that the transaction “marks a significant step toward expanding access to Polymarket’s category-defining platform” in the US.
Coplan claimed Polymarket is the largest prediction market globally and has “become synonymous with understanding the probability of current events.”
Who are you? QCEX was founded four years ago and applied for a CFTC license in 2022 but only received CFTC clearance on July 9.
Founder Sergei Dobrovolskii said he had “long believed in its potential to change the way people access and understand information, and express their views on that information.”
He said the acquisition meant Polymarket could leverage its licenses, technology and “expertise in the retail trading sector.”
The signal and the noise: Demand for Polymarket’s prediction markets is “greater than ever,” Coplan added. “Not just in user growth and trading volume, but in how mainstream audiences are turning to Polymarket to separate signal from noise, bias and speculation.”
The press release said that in the first six months of this year alone $6bn had been traded on its prediction markets.
“Now, with the acquisition of QCEX, we are laying the foundation to bring Polymarket home – re-entering the US as a fully regulated and compliant platform that will allow Americans to trade their opinions.”
Funding: Notably, it was reported in June that Polymarket raised $200m at a $1bn valuation from existing investor Peter Thiel’s Founders Fund.
All about the Base: E+M on Monday linked Polymarket to the launch last week of Coinbase’s ‘everything app,’ pointing to the appearance of Coplan at a Coinbase investor event in June.
The new Base app will include prediction markets functionality within its all-encompassing social, discovery, chat, trading and payments offering, according to John Granata, head of product at Coinbase.
During the June event, Coinbase CEO Brian Armstrong said prediction markets were “really starting to take off and go mainstream.”
Instant reaction: Matt Levine of Bloomberg said of the deal that it was “really good for Polymarket because, somewhat by accident, prediction markets are now lightly regulated (and tax-advantaged!) legal sports-betting sites, and there is just way more demand for sports betting than there is for predicting off-cycle elections.”
He added: “Obviously, it makes sense for Polymarket to buy a little-known derivatives exchange, but the real move is for sports books to buy little-known derivatives exchanges.”
👀 “If you can’t beat ’em, join ’em: If ‘regulated futures exchange’ is the most efficient way to run a sports-betting business, then the sports gambling sites really should get into the regulated futures exchange business.”
Getting the bird: DraftKings has been rumored to be talking to another startup CFTC-licensed exchange, Railbird, by Front Office Sports, citing no sources, while the same website has also suggested Kalshi and FanDuel/Flutter have held talks.
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