Polymarket to Introduce In-House Trading Desk That Bets Against Users: Report

Summary: Polymarket is launching an internal trading desk that will trade against its customers as it prepares for a relaunch in the U.S. after receiving regulatory approval. This move mirrors a similar approach taken by rival Kalshi, sparking concerns about conflicts of interest. As both platforms navigate this evolving landscape, they face scrutiny regarding their operations and the nature of prediction markets.

Key Takeaways

Polymarket is starting an in-house trading desk that will compete against its users.
This strategy is similar to the one used by Kalshi and has faced criticism regarding conflicts of interest.
The Commodity Futures Trading Commission has cleared Polymarket to operate in the U.S. after it paid a penalty in 2022.
Both Polymarket and Kalshi attract liquidity providers to ensure market efficiency, raising questions about the distinction between prediction markets and traditional gambling.

Polymarket's New Trading Desk

Polymarket is actively seeking staff for a new internal market-making team that will trade against its customers. This approach is similar to one implemented by competitor Kalshi, which has faced legal challenges and criticism for its model. Sources familiar with the development, who requested anonymity due to the confidential nature of the plans, indicated that Polymarket has been in talks with traders, including those involved in sports betting.

Polymarket has not publicly commented on its hiring efforts.

This initiative coincides with Polymarket's preparations for a comprehensive relaunch in the United States after securing regulatory approval from the Commodity Futures Trading Commission (CFTC). The company had previously incurred a $1.4 million penalty in 2022 for running an unregistered derivatives exchange.

Kalshi's Legal Troubles

Kalshi already has an in-house trading division called Kalshi Trading, which places bids that directly counteract its users’ bets. Company executives argue that this trading desk is essential for adding liquidity and enhancing user experience. However, critics contend that this setup creates significant conflicts of interest, making Kalshi appear to operate like a conventional sportsbook instead of a neutral peer-to-peer platform.

Some critics have gone as far as to label Kalshi a gambling company rather than a prediction market. “Let’s be honest, it’s gambling, and many things fall under that category,” remarked a user on social media platform X.

Adding to the controversy, a class-action lawsuit filed recently alleges that Kalshi Trading creates betting lines that disadvantage its customers. The suit states, “Consumers betting on Kalshi are up against funds provided by a sophisticated market maker on the opposite side.”

In response, Kalshi co-founder Luana Lopes Lara dismissed the lawsuit on social media, claiming it is a “pure smear campaign.” She emphasized that Kalshi Trading operates at a loss and does not enjoy any preferential treatment or access.

This legal challenge reflects growing unease about whether prediction markets are functioning as unbiased platforms where users with different views can trade directly with one another.

Polymarket's Focus on U.S. Markets

The establishment of Polymarket’s internal trading desk comes as the company prepares to return to the U.S. market after operating from abroad for an extended period.

In December, the CFTC provided a no-action letter for two entities, QCX LLC and QC Clearing LLC, which Polymarket acquired for $112 million in early 2025. This acquisition enabled Polymarket to achieve licensed designated contract market status and allowed for regulated clearing processes. The CFTC also granted temporary relief from certain data reporting requirements, which enables the platform to operate under the same regulations as federally supervised trading venues in the U.S.

Polymarket's founder and CEO, Shayne Coplan, expressed excitement about receiving “the green light to go live in the USA,” commending the CFTC staff for their rapid handling of the process.

The company’s regulatory approval follows a tumultuous period that intensified when the FBI raided Coplan’s Manhattan home in November 2024, confiscating devices as part of an investigation related to whether American users were still accessing the site via VPNs despite the ban implemented in 2022.

Even though Polymarket has been barred from U.S. operations since 2022, it has aggressively expanded internationally, recording approximately $6 billion in bets during the first half of 2025.

The platform gained significant attention during the 2024 presidential election by closely tracking Donald Trump’s odds of winning.

Market Makers and Institutional Interest

Prediction markets depend on market makers who are willing to take less popular trades, as these platforms facilitate transactions between buyers and sellers on binary yes-or-no contracts.

Both Polymarket and Kalshi have offered incentives to encourage heavy users to provide liquidity, while a few established trading firms, including Susquehanna International Group and Jump Trading, have emerged as external market makers on Kalshi.

Additionally, Mike Novogratz’s Galaxy Digital is currently in discussions with both platforms to act as a liquidity provider. Novogratz mentioned to Bloomberg that they are “experimenting on a small scale with market-making in prediction markets.”

The ongoing debate centers around whether prediction markets truly differentiate themselves from traditional gambling operations. During a recent public appearance, Coplan referred to standard sportsbooks as a “scam” that “rip off the consumer,” positioning Polymarket as a transparent alternative where users trade directly with one another, rather than confronting house odds designed for profit extraction.