As the 2024 US presidential race heats up, a new frontier for political betting has emerged in the crypto world. Platforms like Polymarket, Kalshi, and PredictIt are seeing a surge in wagers on election outcomes, even as US regulators crack down on these activities.

At the heart of this trend is Polymarket, a decentralized finance (DeFi) platform that allows users to bet on everything from election winners to the possibility of alien disclosure.

Crypto Betting Frenzy On Polymarket

According to a recent Bloomberg report, the amount of open wagers on Polymarket related to US election outcomes has soared by over 500% in recent months, approaching the $1 billion mark.

According to the report, this surge in activity has been driven in part by “high-profile events” like President Joe Biden’s withdrawal from the race and the assassination attempt on former President Donald Trump.

The growth is particularly striking given that Polymarket claims to have excluded US-based users since 2022 as part of a settlement with the Commodity Futures Trading Commission (CFTC). Despite this, the reality on the ground appears to be quite different. Interviews with US-based Polymarket users reveal that the platform’s system for blocking American traders is easily circumvented using virtual private networks (VPNs).

In addition, social media is reportedly filled with instructions on how to access the platform from the United States. Bloomberg reports that some traders have even openly discussed their Polymarket activities on social media, undeterred by the platform’s stated restrictions.

Regulators Warn Of ‘Integrity Risks’

According to the report, this development raises significant concerns for US regulators, who have been increasingly vocal about the need to crack down on election-related betting.

CFTC Enforcement Director Ian McGinley has touted the Polymarket settlement as proof that “all derivatives markets must operate within the law regardless of the technology or legal structure used.” However, legal experts argue that the CFTC’s guidance on how DeFi platforms can effectively block US users has been lacking.

“Taken together with the lack of regulation, DeFi protocols currently are not left with much guidance on how to effectively comply,” said Elizabeth Davis, a partner at Davis Wright Tremaine and a former CFTC chief trial attorney for enforcement.

Crypto champions like former President Donald Trump have already shared Polymarket’s odds on the likelihood of his return to the White House, with the platform’s data suggesting he has a 55% chance of winning.

However, CFTC Chairman Rostin Behnam has warned that these election-related contracts “ultimately commoditize and degrade the integrity of the uniquely American experience of participating in the democratic electoral process.”

At the time of writing, the total crypto market cap is valued at $2.17 trillion. On the other hand, Bitcoin is trading at $63,800, down over 1% in the 24-hour time frame.