Prediction markets are increasingly receiving backlash/bans from regulators of different jurisdictions. This time, Argentina cracked the whip on the prominent crypto-based prediction market platform Polymarket. The country’s court and telecom regulator pinpointed the reason: Polymarket operates as an unlicensed online gambling service.
For Polymarket, these pushes and pulls between regulatory shadows and approvals are not a new experience. Several countries have blacklisted the platform for improper operations and consumer protection concerns, while others have supported it.
Gambling regulator pulls curtain on Polymarket in Argentina
A court in Buenos Aires, the country’s capital city, ordered telecom regulator ENACOM to block internet access to Polymarket’s website. The court has also strictly ordered Google and Apple to remove the Polymarket app from stores for users in the country.
The strict regulation stems from a government body—Buenos Aires City Lottery (LOTBA)—Argentina’s official government body that oversees and regulates all gambling and betting activities. Other casino associations in the country also joined to crack down on Polymarket.
Legal disputes cause Polymarket ban in Argentina
Legal issues are quite common reasons why several crypto platforms get banned or restricted in several regions. And this is one of the core reasons Polymarket faced restrictions in Argentina.
Lack of operational licenses
Authorities concluded that the platform is just a prediction tool, but it had not acquired any authorization/license in any Argentine province. This made it illegal under local gambling laws.
Risks to consumer protection
The second factor points to a lack of KYC (know your customer). Age and identity verification add more trust to a platform. The authorities cited that users could place bets using crypto or cards without verifying identity or age verification. If no KYC feature continues to work on Polymarket, the platform will open doors to underage gambling and fraud risks.
Suspicious activities
Polymarket had a betting market on Argentina’s inflation rate, a measurement of how fast prices rise in the country. Here, participants could bet on what the next inflation number would be.
However, authorities found out about suspicious activities because participants bet on accurate results. For instance, if the question is “Will inflation hit above 10% next month?” people clicked the right answer before the official data became public.
And, in fact, this has drawn the attention of authorities, raising concerns over any insider information; some users might have had access to government data.
Argentina is not alone
As mentioned in the introduction, there are several other countries banning Polymarket and other prediction markets such as Kalshi. Europe is one of the regions that has placed stringent rules on Polymarket. France, the Netherlands, Belgium, Hungary, Portugal, and Asian countries, including Singapore, have either cracked down on or restricted the crypto-based prediction market.
Legal battlefield on prediction markets persists in the US
When the US Commodity Futures Trading Commission (CFTC) echoes prediction markets, several states in the country aim to restrict them. State regulators find prediction markets lack gambling licenses and are illegal under state laws.
For the CFTC, laws concerning prediction markets come under the federal system (Commodity Exchange Act); states cannot restrict or regulate any laws that have federal oversight.
