France’s National Gaming Authority (ANJ) is reportedly considering a ban on cryptocurrency-based prediction platform Polymarket following a substantial win by a French user during the 2024 U.S. presidential election. This move signals increased regulatory attention to decentralized prediction markets, which offer high-stakes wagering on political events. Here’s an analysis of the case, the potential regulatory actions, and the complexities surrounding Polymarket’s operation in France.

ANJ Investigates Polymarket as Potential Illegal Betting Platform

French User’s Profitable Election Wager Draws Attention: A report from cryptocurrency news outlet The Big Whale reveals that the ANJ, France’s National Gaming Authority, is scrutinizing Polymarket due to its resemblance to unlicensed gambling. While the platform had previously been on ANJ’s radar, it is now reportedly under closer review after a French user known as “Fredi9999” won a massive profit betting on the U.S. election.

Concerns About Legality: Polymarket allows users to wager on event outcomes using cryptocurrency, skirting conventional regulatory frameworks. French regulators are increasingly wary of platforms that encourage high-stakes, speculative wagers without oversight, potentially classifying Polymarket as illegal betting in France.

French Bettor “Fredi9999” Wins $19 Million on Trump Victory

High-Stakes Wager on U.S. Election: The French user “Fredi9999” made a bold bet of $28 million on former President Donald Trump winning the 2024 election. This wager was part of a broader $3.2 billion in election-related bets on Polymarket, with $1.3 billion backing Trump and $827 million on Vice President Kamala Harris.

Profitable Outcome: Trump was declared the victor early Wednesday, and Polymarket disclosed that “Fredi9999” profited approximately $19 million. The size and success of this bet have fueled ANJ’s concerns, prompting speculation that France could soon restrict Polymarket’s access to its market.

Polymarket’s Legal Ambiguities and Potential Regulatory Challenges

Unregulated in the U.S., But Benefits from Loopholes: Although headquartered in New York, Polymarket does not operate legally within the United States. However, it could benefit from recent legal developments that allow certain U.S. platforms, such as Kalshi, to offer election prediction markets under Commodity Futures Trading Commission (CFTC) oversight. Unlike regulated entities, Polymarket remains outside the CFTC’s jurisdiction, operating largely unchecked.

France Faces Potential Enforcement Challenges: Should ANJ attempt to restrict Polymarket, enforcement may prove difficult. Many users access Polymarket anonymously with cryptocurrency wallets, and VPNs make it possible for French users to bypass any domain blocks. This technological workaround complicates efforts to enforce a ban, as users can easily mask their location.

Polymarket’s Claim as a Superior Predictor of World Events

Prediction Platforms Claim Accuracy in Political Forecasting: Polymarket and similar platforms argue that decentralized prediction markets are better at forecasting real-world outcomes than traditional polling or media models. Trump’s 2024 victory has provided some validation, with Polymarket trading him as a moderate favorite leading up to Election Day—a position that traditional models saw as a close call.

Mixed Accuracy on Broader Metrics: While Polymarket traders correctly forecast Trump’s win, their other predictions were less accurate. Polymarket users placed Vice President Harris as a strong favorite to win the popular vote, while polling data indicated Trump had narrowed the margin. This divergence suggests that while prediction markets may offer insights, they are not foolproof and benefit from a larger sample size to refine accuracy.

Implications for the Future of Decentralized Prediction Markets

Increased Regulatory Scrutiny on the Horizon: The size of bets and potential winnings on Polymarket have led to heightened regulatory interest. ANJ’s review could set a precedent for how decentralized prediction markets are treated in Europe, particularly as they gain popularity among users seeking high-risk, high-reward bets on major events.

Challenges in Balancing Innovation and Regulation: Polymarket’s rapid rise highlights a dilemma for regulators: how to address new financial technologies that challenge traditional frameworks. As decentralized platforms grow, regulators must weigh the need for consumer protection against the innovation these platforms bring to the financial landscape.