Polymarket is facing calls for more regulation. It’s introducing sportsbook-style safeguards

By Marshall Cohen, CNN

New York (CNN) — Prediction site Polymarket rolled out new consumer protections and anti-addiction measures Wednesday, as a growing number of policymakers call for more regulation of the booming industry.

Prediction sites have exploded in popularity this year, with billions of dollars wagered on everything from sports to elections, entertainment and even the weather.

Polymarket will now allow users to create deposit limits that can’t be immediately undone, so they can slow down their spending and potential losses. Users can also place themselves on an “exclusion list” that would temporarily or permanently block them from the platform.

The company is also offering new access to mental health resources for users exhibiting what it calls “compulsive financial trading behaviors.” This is part of a new partnership with Birches Health, a virtual gambling addiction therapy company.

“Right now, the number-one priority is just getting this out, giving it into the hands of the millions of people that leverage and use us, and trust us to protect them and keep them safe,” Malea Otranto, Polymarket’s new head of global safety, told CNN in an interview.

Prediction sites are similar to gambling in terms of risking real money, but they’re legally classified as federally regulated financial markets, which means they don’t have to follow state consumer protection laws for casinos and sportsbooks. It falls on companies to voluntarily offer tools that users can opt into – which many state and federal lawmakers say is inadequate.

Jonathan Cohen, who leads gambling policy at the American Institute for Boys and Men, praised these moves but said their impact may be limited, pointing to data from state regulators showing that few gamblers utilize similar tools on sportsbooks.

“These restrictions are standard fare for online sports-betting platforms,” Cohen said. “The companies are clearly recognizing that from a user standpoint, the behavior is similar to, if not synonymous with, gambling.”

Asked about the effectiveness of these “responsible trading” tools, Otranto said Polymarket will be tracking usage of these tools and might make adjustments in the future.

“It’s really incredibly important as we continue to grow and accelerate to give people control over how they want to leverage our platform,” Otranto said.

Promoting ‘responsible trading’

Prediction sites like Polymarket and Kalshi are regulated federally by the CFTC, a small federal agency that has historically spent most of its time policing commodities trading, like soybean futures and oil derivatives.

But sports markets are the main drivers of the prediction frenzy. Sports and multi-leg parlays popular with sports made up more than 98% of trading volume this month on Polymarket’s US site, according to TickerTracker, a data analysis firm.

This is part of the reason why “responsible trading” safeguards on Polymarket and Kalshi resemble the “responsible gaming” policies at sportsbooks like DraftKings and FanDuel.

Polymarket’s deputy chief legal officer Olivia Chalos acknowledged these similarities, but said the company follows a different business model than sportsbooks, and wants to protect users, especially younger users, who aren’t experienced with financial exchanges.

“You’re seeing a user base that did not previously participate in financial markets coming in, and doing this at scale,” Chalos told CNN. “With that, there are measures that need to be in place, because you’re recognizing an audience that is participating in markets for the first time.”

State vs. federal regulation

Gaming lawyer Joshua Kirschner said “there is no analogue” in existing federal law that gets close to matching the seemingly “endless list of various tools” found in state regulations that require casinos and sportsbooks to promote responsible gambling and to combat gambling addiction.

That’s one reason why a bipartisan coalition of 44 states have argued in court that prediction platforms should be subjected to state laws and regulated like gambling.

Polymarket’s announcement comes one week after New York filed a lawsuit seeking to shut down the company.

State investigators said Polymarket is circumventing New York’s “strict regulation of licensed gambling,” which includes requirements to block underage users, rules against predatory advertising, mandatory funding for addiction programs, and “self-exclusion” policies.

Polymarket denies wrongdoing and filed a countersuit against New York in federal court. The state is also suing Kalshi, which said the case is baseless and will “hurt New Yorkers.”

“These protections are good for consumers,” Kirschner said of Polymarket’s new safety measures, “but maybe it’s also a nod to try to pacify state regulators.”

CNN has a partnership with Kalshi and uses its data to cover major events. But CNN editorial employees aren’t permitted to use prediction platforms.

The-CNN-Wire
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