By Chris Prentice
NEW YORK (Reuters) – Criminal and civil authorities are probing Polymarket, a source with knowledge of the matter said on Thursday, in an investigation that predates the U.S. presidential election that put the betting platform under scrutiny.
Polymarket has gained notoriety for strongly favoring Donald Trump to win the Nov. 5 election.
The source, however, said the scrutiny began months ahead of the election. The full scope and exact nature of the probes were not immediately clear. The betting platform is not registered with the Commodity Futures Trading Commission and had previously settled with the civil regulator over the issue in 2022.
Polymarket declined to comment. A spokesperson for the U.S. Attorney’s Office in Manhattan declined to comment.
On Wednesday, federal law enforcement agents searched the downtown Manhattan home of Polymarket CEO Shayne Coplan, seizing his phone and electronics, Polymarket said on Wednesday.
Polymarket had for weeks put Republican Trump’s odds drastically higher than those of Democratic candidate Kamala Harris – in sharp divergence from opinion polls.
A company spokesperson said on Wednesday: “This is obvious political retribution by the outgoing administration against Polymarket for providing a market that correctly called the 2024 presidential election.”
Bloomberg reported on Wednesday that the site was under investigation for allegedly allowing U.S.-based users to bet on the platform. The New York Times (NYSE:NYT) reported on Thursday that the FBI home search was tied to a criminal probe.
The Department of Justice declined to comment on Thursday. On Wednesday, the Federal Bureau of Investigation declined to comment and the White House did not respond to a request for comment.
In the runup to the election, Polymarket said it does not allow Americans to make U.S. election bets on the exchange, and that it certifies all of its large traders to ensure they are not logging in via VPNs to obscure which country they are in.
Americans have faced steep restrictions on betting on U.S. elections online. The Commodity Futures Trading Commission has previously rejected applications to offer contracts or derivatives that allow Americans to bet on elections.
In November 2023, Kalshi, another betting exchange, sued the CFTC over its ban on U.S. election betting. A federal appeals court sided with Kalshi on Oct. 2, paving the way for Americans to start trading on political races on Kalshi just one month ahead of the election.
The CFTC declined to comment on Thursday.