The landscape of digital prediction markets has become a curious, high-stakes game of cat and mouse, with Polymarket sitting squarely at the center of the controversy. Despite being officially banned for American users since 2022 due to federal regulatory concerns regarding unregistered derivatives trading, a groundbreaking new study by Rutgers statistician Harry Crane reveals that the platform is far from “US-free.” In fact, an eye-popping 30 percent of the platform’s massive trading volume—estimated between $10.6 and $26.7 billion—is linked to traders operating from within the United States. This suggests that while the front door may be locked, thousands of American users are finding clever ways to slip through the side windows, creating a bustling, illicit economy under the nose of regulators.
The methodology behind these findings highlights just how deeply embedded US interest is in these speculative markets. By analyzing the timing of trades and the specific types of events being bet upon—such as US elections and domestic professional sports—Crane was able to map out a clear pattern of American behavior. It turns out that when it comes to sports, US-based traders are particularly active, accounting for nearly half of the volume in that specific vertical. While these figures are estimates derived from indirect proxies, experts in the field of finance view them as the most reliable snapshot currently available, confirming that the scale of this “stealth” participation is not just a rounding error, but a significant pillar of the platform’s global success.
The primary tool for this digital bypass is the Virtual Private Network (VPN), which allows traders to mask their physical location and circumvent Polymarket’s own terms of service. This creates a difficult situation for oversight: because these traders are actively obscuring their identities to dodge a federal ban, quantifying their activity is notoriously challenging. Even so, the sheer volume of this hidden trade—dwarfing the activity on Polymarket’s legally permitted US-only mobile app—suggests that the offshore crypto-based platform holds an allure that the regulated, compliant version of the app has yet to replicate, likely due to deeper liquidity and a wider array of betting options.
This situation presents a growing challenge for entities like the Commodity Futures Trading Commission (CFTC). While the agency generally lacks jurisdiction over offshore markets, leadership has hinted at a willingness to flex its regulatory muscle on a case-by-case basis to prevent illegal activity. However, the agency faces a dilemma: is it worth the immense resources required to chase down everyday retail traders using VPNs? High-profile incidents, such as the recent case of a special forces soldier charged by the DOJ for using classified information to net $400,000 on the platform, illustrate that this “ban” is not only being skirted for casual sport bets, but also for potentially high-stakes, ethically compromised insider trading.
The study, which was funded by a coalition of prediction market industry groups eager for data, serves as a wake-up call for both the industry and its watchdogs. By shedding light on the “shadow market,” Crane has provided evidence that the appetite for prediction markets in the US remains ravenous, regardless of the regulatory status of the host platform. As Polymarket continues to partner with major American media outlets and sports leagues, the line between “legal” and “offshore” becomes increasingly blurred for the average consumer, making it harder for the average user to distinguish which services are sanctioned for their use and which could land them on the wrong side of federal law.
Looking ahead, the trajectory of this hidden economy is staggering. If current trends hold and the crypto-based platform maintains its grip on user activity, the researchers estimate that US-based volume facilitated through these offshore channels could soar to a staggering $133 billion by 2030. This projected growth suggests that legislative and regulatory bodies are currently fighting a tide that is only getting stronger. Whether the future holds more stringent enforcement, a shift in legal classifications, or a more robust expansion of regulated domestic alternatives remains to be seen, but one thing is certain: the temptation to bet on the future is currently proving far stronger than the digital walls built to prevent it.
