Despite a ban on serving U.S. customers, wallets linked to the United States traded approximately $571 million in political prediction markets on Polymarket over the past year, the highest volume of any country, according to data from on-chain analytics firm Allium. This figure underscores the persistent demand among American bettors for event-based wagering that regulated platforms largely avoid.
Polymarket, a decentralized prediction market built on the Polygon network, has been prohibited from operating in the U.S. since 2022 after settling with the Commodity Futures Trading Commission (CFTC) over allegations it offered illegal off-exchange commodity options. The platform agreed to pay a $1.4 million penalty and block U.S. users. Yet enforcement has proven difficult, as many Americans continue to access the site through virtual private networks (VPNs) or by using non-U.S.-linked accounts.
The Geographic Composition of Trading
Allium's analysis focused on political contracts traded over the 12 months ending June 2026. The firm identified wallets with clear U.S. connections—those that funded trades from U.S.-based exchanges or had known on-chain links to American entities. The total of $571 million in political bets from these wallets accounted for roughly 40% of all political trading volume on Polymarket during that period, a higher share than any other single country.
Interestingly, the data reveals that U.S. traders do not primarily concentrate on domestic elections. Instead, they have demonstrated a marked preference for geopolitical and foreign conflict markets—areas that regulated U.S.-based prediction platforms, such as Kalshi and PredictIt, are often unwilling to list due to legal risks or restrictions imposed by the CFTC. For example, markets on the ongoing Russo-Ukrainian war, Middle East tensions, and even novelty events like 'Will Taylor Swift endorse a candidate?' have drawn heavy American participation.
Demand Beyond Elections
This geographic focus matters for several reasons. First, it indicates that U.S. demand for political prediction markets extends well beyond the confines of presidential or congressional elections. Second, it poses a challenge to U.S. regulators: if Americans are going to bet on foreign conflict outcomes regardless, is it better to regulate these markets domestically—ensuring transparency, consumer protections, and tax oversight—or to keep the current ban that drives activity offshore? The CFTC under both Democratic and Republican administrations has struggled with this question, with some commissioners arguing that innovation-friendly policies could bring these activities into compliance.
The $571 million figure is all the more striking given that Polymarket's overall trading volume has soared over the past year, driven by the 2024 U.S. presidential election cycle and subsequent global events. Total volume across all markets on the platform exceeded $5 billion in 2025 alone, with political markets representing about a quarter of that activity. The U.S. portion, while forbidden, has remained a core component of the platform's liquidity.
Regulatory Challenges and Enforcement Gaps
Critics of the ban argue that it merely pushes American bettors toward less transparent alternatives, including decentralized platforms where Know Your Customer (KYC) checks are minimal or nonexistent. Polymarket did implement KYC for all users in 2024, but enforcement remains imperfect. The data from Allium suggests that even with KYC, users can mask their location through various means, making a full ban difficult to enforce.
On the other side, supporters of the ban worry about the social implications of allowing unfettered betting on war and elections, especially when markets might be manipulated. In regulated settings, measures such as position limits, price manipulation safeguards, and mandatory disclosures exist. Offshore platforms lack these protections, raising the risk of fraud or market distortion.
The American traders who do participate on Polymarket are not necessarily better at predicting outcomes than their international counterparts, Allium found. Their win rates were statistically similar to those of non-U.S. traders. However, the sheer volume of their activity indicates significant appetite, and the political nature of the bets introduces additional layers of complexity for regulators who must weigh free-speech considerations against financial oversight.
Policy Implications and Future Outlook
Looking ahead, the landscape may shift. In 2025, several U.S. states have considered legalizing prediction markets for certain events, and federal legislation has been proposed—though not yet passed—that would create a safe harbor for properly regulated platforms. Polymarket itself has been seeking approval to bring margin trading to U.S. customers, a move that would require lifting the ban or obtaining a specific exemption from the CFTC.
For now, the $571 million figure serves as a reminder that prohibition alone does not eliminate demand. It merely channels it elsewhere. Until a coherent regulatory framework is established, American bettors are likely to continue participating in these markets, even if that means operating in a legal gray area. The challenge for policymakers is to decide whether that gray area is acceptable or whether more active engagement—either through enforcement or through legalization—is necessary.
Source:Coindesk News