Polymarket Reentering US Market in $112 Million QCEX Acquisition

Polymarket Reentering US Market in $112 Million QCEX Acquisition

With the help of the $112 million purchase of clearinghouse and derivatives exchange QCEX LLC, prediction markets operator Polymarket is making a comeback to the United States.

On Monday, Polymarket made the announcement.  The Commodities Futures Trading Commission (CFTC), which regulates prediction market companies doing business in the United States, has granted a license to QCX, LLC, the target's derivatives division.  Additionally subject to CFTC regulation is its QC Clearing, LLC. business.  The clearinghouse "only clears fully collateralized positions and does not maintain a financial resource package or use a margin-setting methodology."

"The acquisition of the QCEX entities paves the way for US users to access Polymarket in the near future within a fully regulated, US-compliant framework,” according to a statement issued by Polymarket.

About a week after the Justice Department (DOJ) and the CFTC closed their investigation into the company, news broke that Polymarket was returning to the United States.  This resulted from claims made as early as 2022 that the operator was providing event contracts to clients in the United States without the necessary government license.  The FBI raided founder and CEO Shayne Coplan's Manhattan apartment last November, but he was not taken into custody.

Polymarket Must Exist in the US

Polymarket must be in the US given the thrust of prediction markets into contracts for sporting events and the operators' well-established track record of accuracy in political contests.

The company claims to be the biggest of its sort globally, but one of the reasons it's valued lower than competitor Kalshi could be that it doesn't have access to the US.  Long approved by the CFTC, that company recently received $185 million at a $2 billion valuation.  At a $1 billion value, Polymarket was reportedly on the verge of raising $200 million last month.

In 2021, QCEX began the process of acquiring permissions for designated contract markets (DCMs) and derivatives clearing organizations (DCOs).  These approvals made it possible for the buyer to be compliant in this country and opened the door for the Polymarket purchase.

“Demand is greater than ever — not just in user growth and trading volume, but in how mainstream audiences are turning to Polymarket to separate signal from noise, bias, and speculation,” said Coplan in the press release. “Now, with the acquisition of QCEX, we are laying the foundation to bring Polymarket home — re-entering the US as a fully regulated and compliant platform that will allow Americans to trade their opinions.”

News Flow in Prediction Markets Is Increasing

Prediction markets news flow has been robust this year, largely because to the numerous states seeking legal action against Kalshi for providing contracts for sports derivatives while lacking gaming permits in those countries.

In the days preceding Monday's announcement of Polymarket's acquisition of QCEX, that was made clear.

Smarkets, one of the biggest sports betting exchanges in Europe, was rumored to be returning to the US last week with a prediction markets offering.  Political derivatives specialist PredictIt said last week that it and the CFTC had struck a deal to raise contract limits and improve platform liquidity.