Federal authorities’ raid of the home of Polymarket CEO Shayne Coplan Wednesday might be concerning to DrafKings and any other US companies thinking of getting into the business of gambling on election outcomes.
The FBI raided Coplan’s downtown New York home, seizing his phone and other electronics. It highlights the volatile atmosphere presently surrounding political futures markets—commonly described as election betting.
DraftKings CEO Jason Robins had indicated last week that the company will explore entering the presidential-election market over the next couple of years. DraftKings can’t offer election betting now, because it’s illegal to do so as a sportsbook. But depending on the outcome of ongoing legal cases, financial markets may be able to offer contracts on election outcomes, which function similarly to bets.
That’s how DraftKings would likely get into the political-betting game. In the meantime, it watches another battle unfold.
Polymarket does not allow trading in the US, though bettors can bypass the ban by accessing the site through a VPN, according to a story in the New York Post. The company took in more than $3.6 billion in wagers for the presidential election race between Donald Trump and Kamala Harris according to published reports.
Polymarket also had a high-profile presence in the recent United States Presidential Election by predicting an easy victory for Trump. That differed sharply from the polls.
Lawmakers on both sides of the political aisle had different perspectives on this issue. Interpretations of the raid include charges that Polymarket illegally served US bettors on one side and that it was a victim of political retribution on the other.
Election Betting Sites Clashing With Government
This action constitutes the latest battle between the United States government and companies that offer presidential political betting options.
Polymarket is only one of several companies clashing with the Commodities Futures Trading Commission (CFTC), which fined it $1.4 million in 2022 for failing to register with the regulator.
The CFTC originally shut down Kalshi, PredictIt and Aristotle International from offering their election products this year. A federal appeals court allowed the companies to go forward last month, but the fight between gambling and government entities has not stopped.
The legal process appears to be a court-by-court, hearing-by-hearing development that will play out in the near future.
But does the raid indicate anything deeper?
The New York Post story quoted a source who suspects this was aimed to punish the company that predicted Trump to comfortably beat Harris.
This is obvious political retribution by the outgoing administration against Polymarket for providing a market that correctly called the 2024 presidential election.
Coplan was not arrested and has not been charged, according to reports.
Polymarket seems to have support from Trump
The raid would likely have stronger implications had Harris won the White House. But Trump, to whom the FBI will ultimately report after his inauguration, is a big fan of Polymarket.
Both Trump and Elon Musk continually touted its findings, which saw him comfortably ahead in the eyes of bettors, throughout the month before the election.
It would be logical to believe that no government agency in a Donald Trump administration would go after Polymarket. But we’ll see.
How The Presidential Betting Markets Became Important
Polls are the life blood of every election cycle, even if they are ultimately proven wrong.
Television views them as their daily bread, because every new poll provides a hook to anchor hours of programming. Without new poll data, the shows would struggle to maintain viewership ratings for the months leading to the election. That would constitute a colossal loss of revenue.
Candidates like them too. Throughout every campaign, they endorse the polls showing them ahead. Most presidential candidates can usually find one that shows he or she has a favorable performance rating. Candidates also do their own internal polling to monitor voter concerns.
Betting markets played only a background role in that conversation throughout 2016 and 2020. Their reference was more anecdotal than analytical.
That changed dramatically in 2024.
Here are some reasons:
- They make interesting stories.
- Unlike the myriad of political polls causing a jumbled picture, betting markets indicate where gamblers – especially big ones – placed their money. There are also fewer betting polls, making a potential pattern easy to discern.
One New York Post story cites a French “whale”, who bet millions on a Trump and raked in about $85 million in profits – over $50 million more than previously reported, according to a report.
The anonymous bettor, who goes by Théo, was previously believed to operate four separate accounts on Polymarket, the story adds.
This type of account links the political market with the flamboyant, multi-billion-dollar legalized sports betting world. That’s where popular personalities like “Mattress Mack” make highly-publicized, seven-figure bets on major events like the World Series, Super Bowl and Kentucky Derby.
The proliferation of sports betting since the 2018 repeal of PASPA makes political betting acceptable across the wagering landscape.
The betting totals move like a stock market. They can be compared both with one another and over time. Although Polymarket priced in Trump at 53.3% on Oct. 7, for example, PredictIt favored Harris 51 to 49%. Trump’s percentage later went higher.
Perception of Polls, Betting Information is Left to the Public
Betting markets are surprisingly accurate at predicting election outcomes.
The betting favorite has only lost twice since 1868, according to the Conversation, a nonprofit news organization. One of those times was Trump’s previous victory.
Bettors who had a 2016 ticket on Donald Trump over Hillary Clinton received odds of anywhere from +250 (5-2) to +350 (7-2) at many books. The only other occurrence was in 1948, when Harry Truman beat eight-to-one odds to defeat Thomas Dewey.
The enticement of the betting angle is to provide another discussion angle for people who like to follow trends.
But, ultimately, the winning bet is placed by the voters.
