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Exclusive. France to ban Polymarket

Wednesday, November 6, 2024

The ANJ, France's gambling regulator, is expected to ban access to the site in the near future. The cryptocurrency prediction platform was a big hit during the US elections.

This was hanging over Polymarket, whose use is the subject of much discussion among the world's various regulatory authorities. According to our information, the National Gaming Authority (ANJ), whose remit is to regulate gambling, is preparing to ban it from French users.

Polymarket is an American prediction markets platform that allows users to bet on the probability of just about anything and everything (sports results, geopolitical events, future prices of financial assets, etc.). In recent months, the company has made a name for itself with the number of bets placed on the US presidential election. In all, more than $3.2 billion was bet by punters from all over the world on this event.

On November 5 alone, $294 million in volume was recorded on the platform.

Polymarket Data / @Fergmolina

The concept of prediction markets is not new, but Polymarket stands out for its use of blockchain: users bet with cryptocurrencies in a disintermediated way. Betting proposals, meanwhile, are currently decided by the US start-up (this could change if the project is decentralised via the launch of a token).

Polymarket has raised $74 million from venture capital funds since its launch in 2020, but also from prominent figures in the crypto ecosystem such as Vitalik Buterin, the co-designer of Ethereum.

Under the law, Polymarket is akin to gambling

"Even if Polymarket uses cryptocurrencies in its operations, it remains a betting activity and this is not legal in France," blows a source close to the ANJ.

"Polymarket consists of betting money on something random, that's strictly the definition of gambling, it's like a sports bet," confirms William O'Rorke, partner at ORWL Avocats. "And unlike financial companies, the ANJ has the power to block the platform even though Polymarket does not specifically target French users," he continues.

Although its headquarters are in New York, Polymarket is currently inaccessible to Americans. However, a recent court ruling may finally allow it. During the presidential elections, other non-crypto competitors, such as Kalshi, seized the opportunity to enter the US market. Nevertheless, a legal limbo persists, with the ruling subject to appeal.

French trader alerted regulator

According to our information, it was the mysterious French trader who made a bet of more than $30 million on a Donald Trump victory that is believed to have aroused the regulator's attention. According to Polymarket data, the latter could pocket a net profit of around $19 million.

When questioned through official channels, the ANJ told The Big Whale: "We are aware of this site and we are currently examining its operation as well as its compliance with French gambling legislation. "

So what means are available to the ANJ to block the platform?

"The ANJ can block the domain name in France, and even put pressure on all the players who give the platform access to the French market," says lawyer William O'Rorke. "This particularly concerns media outlets that may have distributed links from Polymarket, or gaming directories," he stresses.

It will nevertheless be fairly easy to get around this block, as Polymarket does not require users to provide their identity to create an account (only a crypto wallet). Even in the event of geo-blocking, it will be relatively easy to use a VPN.

>> VIDEO: "Proph3t (MetaDAO): "Predictive markets have the potential to be more accurate than polls"

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Before investing in any product, investors should fully understand the risks involved and consult their own legal, tax, financial, and accounting advisors.

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