Polymarket ban fails as U.S. wallets wager $571M

U.S.-linked wallets traded about $571 million in political contracts on Polymarket over the past year, according to on-chain research firm Allium. 

Summary

• U.S.-linked wallets led Polymarket political trading despite restrictions blocking American users from platform access.
• Allium said American demand leaned toward foreign conflict markets unavailable on regulated U.S. venues.
• The data adds pressure as Polymarket faces CFTC scrutiny and wider global regulatory attention.

The figure made the United States the largest national group in the data, ahead of Hong Kong at $422 million.

The activity came despite Polymarket blocking U.S. users from its offshore platform. Allium said the restriction has not stopped American-linked wallets from reaching the platform through crypto wallets, stablecoins and location-masking tools.

Polymarket’s U.S. ban failed to stop political betting, citing the Allium findings. The report said the data raises new questions about offshore market access and oversight.

Allium said it could assign country tags to only about 6% of political-market wallets. The firm said the numbers should be read as “directional rather than exact,” because wallet behavior does not identify every user with certainty.

Americans favor foreign conflict markets

The Allium report found that U.S.-linked traders did not mirror the broader Polymarket user base. Geopolitics made up 46% of U.S. notional volume, compared with 36% for the platform as a whole.

Election markets made up only 16% of U.S. volume, compared with 32% across Polymarket. That means U.S.-linked traders focused more on foreign wars and diplomatic events than on election contracts.

The largest U.S.-linked market was a novelty contract on whether Ukrainian President Volodymyr Zelenskyy would wear a suit. Five of the 12 largest U.S.-linked markets were tied to the Iran war.

This demand points to a gap between offshore markets and regulated U.S. venues. Kalshi and Polymarket’s compliant U.S. arm mostly list markets tied to elections, economic data and rate decisions. Foreign-conflict contracts remain limited under regulated U.S. access.

Regulation tightens around prediction markets

The report lands as Polymarket faces new pressure in the United States. As crypto.news reported, the CFTC opened a broad investigation into Polymarket covering business activity and social media practices.

The probe follows questions from Senators Adam Schiff and John Curtis. The lawmakers urged the CFTC to investigate Polymarket over alleged fake advertising and user-protection concerns.

Prediction markets also face legal fights at the state level. Wisconsin sued Kalshi, Coinbase and Polymarket, claiming their event contracts looked like unlicensed gambling.

Kalshi has also faced state action. As previously reported, a Michigan court temporarily blocked Kalshi sports event contracts for local residents, raising the cost of state-by-state disputes.

Offshore demand remains visible on-chain

The Allium report does not show that U.S.-linked traders had better results than other users. On resolved markets, U.S. wallets backed the winning side 81.9% of the time, compared with 80.3% for everyone else.

That means American-linked wallets traded more boldly on some markets, but they did not show a clear edge. At one point, they placed 53% of their volume on a U.S. invasion of Iran, while the rest of the market stood at 26%.

The issue for regulators is not only trading performance. The larger concern is that blocked users may still reach offshore markets while remaining outside direct U.S. oversight.

Moreover, ESMA warned Polymarket over EU rules, saying some contracts may fall under existing financial laws. The warning shows that prediction markets now face tougher checks across several regions.

Polymarket’s scale has grown quickly. The World Cup turned Polymarket into a $5 billion market as sports and politics drove new activity.

Allium’s findings show that access blocks have not removed U.S. demand. They have pushed a large part of that demand into offshore crypto-based markets that remain visible on-chain but harder for regulators to control.