Key Moments:
- Polymarket International processed about $9 billion in trades in April, while its US-regulated platform saw $1.3 billion
- Polymarket agreed to pay a $1.4 million penalty in 2022 after a CFTC settlement and committed to restricting access for US users
- Industry-wide prediction market trading volume surpassed $44 billion in 2025, with monthly activity exceeding $20 billion in early 2026
Persistent Disparity Between Offshore and Regulated Platforms
Recent figures from Polymarket in 2026 illustrate an ongoing mismatch between usage of its US-approved platform and its international business. Although federal regulators required Polymarket to halt American participation on its offshore site four years ago, a significant share of trades still passes through the very venue US customers are expected to avoid.
In April, the company’s offshore operation processed approximately $9 billion in trades, compared to around $1.3 billion on its compliant US platform. This means nearly seven times as much trading occurred outside the regulated US framework. This enduring gap has fueled questions about the practical effectiveness of the restrictions Polymarket agreed to impose after resolving its regulatory case.
Enforcement Challenges and Workarounds
The origins of this regulatory confrontation trace back to 2022, when the Commodity Futures Trading Commission determined Polymarket was operating an unregistered derivatives marketplace. As a result, Polymarket paid a $1.4 million penalty and committed to restricting US customer access.
To comply, Polymarket implemented geo-blocking to limit platform entry based on user location. However, virtual private networks and other technologies allow users to obscure their location, making enforcement difficult. Although Polymarket introduced additional verification steps and increased efforts to weed out Americans attempting to sidestep restrictions, the persistent strength of offshore trading points to enforcement limitations. There is no public data clearly indicating how much of the offshore trading volume originates from US users, but the prominence of the international venue has maintained regulatory attention on the issue.
Strategic Moves Toward Compliance
Recognizing the regulatory complexities, Polymarket made significant changes over the past year. In 2025, it acquired QCEX, a CFTC-licensed exchange, for about $112 million. This acquisition enabled Polymarket to enter the US market using a federally compliant structure, leading to the establishment of Polymarket US, which was built for regulatory alignment.
Liquidity Migration and Market Dynamics
Despite these steps, the majority of liquidity continues to reside offshore. Deep liquidity and greater contract variety still draw traders to the international platform, mirroring trends observed in other financial sectors. This scenario echoes challenges previously seen in the cryptocurrency space, where globally-focused exchanges attracted most activity despite US restrictions, and American customers often found ways to access less-regulated venues.
Sector Growth and Regulatory Scrutiny
Prediction markets have entered a phase of substantial expansion, with industry-wide trading exceeding $44 billion in 2025 and monthly activity above $20 billion in early 2026. The rising prominence of contracts involving elections, geopolitics, economic events, and sports reflects the sector’s integration into mainstream speculative finance.
This rapid growth has sparked regulatory interest. Polymarket has drawn particular attention for trading linked to specific geopolitical markets and questions over possible insider advantages. The company “has cooperated with authorities examining those issues, but the episodes have added another layer to an already complex regulatory picture.”
Implications for Market Participants
The divergence between offshore and US-regulated venues presents unique challenges for investors and trading firms. While the regulated platform offers clearer legal standing, thinner liquidity can hinder large-scale strategies. Meanwhile, the risk exposure of engaging in offshore markets remains substantial for American participants.
The situation may ultimately affect competitive positioning in the industry. Competitors prioritizing regulatory compliance could gain ground if enforcement steps up. Kalshi stands out among these rivals with its focus on US regulatory approval.
Looking Ahead
The future path regulators will take regarding offshore prediction market access remains undetermined. What persists, however, is the dominance of offshore activity in a sector that federal policy aimed to bring firmly within domestic oversight.
| Platform | April 2026 Trading Volume |
|---|---|
| Polymarket International | $9 billion |
| Polymarket US | $1.3 billion |
- Author
Daniel Williams
