FBI Raids Home of Polymarket CEO Shayne Coplan

I think the key factor here is that the website allowed Americans to bet on the political market. Which I still don't quite understand, the FBI waiting until after the election for this. Why didn't they go after them sooner?

Feels wrong.

Robinhood launched a new feature where we could bet on the presidential candidate. I've heard of a couple others too, so I think that laws were created and funded by competitors, and they defined what was legal in a way that excluded polymarket.

I think in this case, polymarket allows betting on anything, competitors got betting on the election legalized (https://www.barrons.com/news/last-minute-legal-ruling-allows...), so they get the cash from polymarket's idea then get them banned/stopped long enough to take their market share.

VC's call it Regulatory Capture, politicians call it corruption.

Polymarket could've easily registered as an exchange at any point in the last 4+ years, and then itself filed the suit that its competitors filed. Instead they chose to just ignore the law.

> VC's call it Regulatory Capture

This isn't regulatory capture. You can disagree with the regulation, but the barrier to entry here is not that high. Kalshi is like 5 years old.

"Capture" is a thing, and it does not just mean "any regulation that I happen to disagree with".

You do need capital to stand up a regulated exchange, but, then, you also need capital to stand up an unregulated exchange. And the difference between those two numbers is not nearly big enough to come anywhere close to creating capture.

You're right, I had been using a definition of regulatory capture that doesn't really fit what I'm seeing when I look it up. I learned it to mean capture of market share through regulation, either by getting your competitors banned, forced creation of consumers through law (like car seats/helmets/paper straws). Maybe someone knows what that is called?

Instead, it means regulatory agencies become dominated by the interests of those they were originally charged to regulate.

I still speculate this raid to be Kalshi/Robinhood/whomever to be going after polymarket at a prime time- the concept of betting on events got huge and the industry of event-hedging directly (avoiding the stock market proxy) no longer needs to band together to get the idea out- now it's a matter of getting all the consumers to choose your particular product vs a competitors.

The Prediction Market industry got out ahead of regulation and effectively chose their own (weak and hands-off) regulator in the CFTC. The requirements involved are not onerous. There are certainly jurisdictions where actual gambling is more tightly regulated. I am not exaggerating when I say that any pair of a good programmer and a decent lawyer could do the technical work to stand up a compliant exchange (they'd need capital, but, again, nothing insane compared to the capital you'd need for an unregulated exchange anyways).

I don't think you are at all correct about the relationship between Polymarket and other event trading venues. For one thing, Kalshi and polymarket are basically contemporaneous. For another, Polymarket plays at these games too (Polymarket has a former Commissioner of the CFTC on their board).

To the extent that Polymarket is playing in the legal grey zone, it's an active choice on their part, not a result of competitors' regulatory advantage or Polymarket's lack of access to regulatory leverage.