Portugal’s gambling regulator ordered Polymarket blocked after illegal crypto betting surged, raising insider trading concerns and regulatory gaps nationwide.
Portugal’s gambling regulator has ordered the shutdown of crypto prediction market Polymarket nationwide. Consequently, authorities cited such illegal operations, unauthorized betting and increasing concerns about political election markets and suspicious trading activity;
Regulator Flags Illegal Crypto Betting and Insider Trading Risks
Portugal’s Gaming Regulation and Inspection Service, known as SRIJ, said Polymarket is unregulated. Therefore, the regulator treats all the platform activity as illegal under the laws on gambling.
Importantly, Portugal prohibits betting on political events, both at home and abroad. However, Polymarket still has presidential election markets available for Portuguese users.
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According to Renascensa, more than four million euros were poured into presidential markets, hours before the results. As such, there were concerns about insider trading and exit poll data leaks.
SRIJ said it informed Polymarket very recently and ordered to cease the activity within 48 hours. However, days later, the website was still up and running in Portugal.
As a result, SRIJ has now to order network service providers to block access to platform on a national scale. Therefore, the emphasis of enforcement has moved to technical restrictions.
One of the busiest markets concerned the result of the presidential election in Portugal. Of note, total volume was over 110 million Euros for primary prediction markets.
Antonio Jose Seguro had 60% implied odds on Polymarket to start election day. Meanwhile, the probability of Andre Ventura was close to 30%.
One hour before polls closed, at 18:00, Seguro’s chance rose to 95%. Subsequently, the odds went to 100% after projection releases.
Similarly, the next president markets had moved sharply before official announcements. In the course of one hour (18:00-20:00), more than $5 million changed hands.
These dramatic shifts happened before projections were made public at 20:00. Therefore, regulators wondered how traders anticipated the result correctly.
Election Market Surge Exposes Gaps in Crypto Oversight
According to Renascença, leaked projections of polling were circulated at polling stations around 18:00. As a result, traders may have acted on information that was not made public.
Media outlets got similar polling data during the period but held off publishing it. However, prediction markets already had the outcome priced in.
SRIJ highlighted that it only oversees gambling operators that are licensed in Portugal. Therefore, it makes no guarantee for the recovery of funds invested in Polymarket.
As a result, the Portuguese users stand to lose money after access is blocked. As a result, consumer protection is therefore uncertain under existing enforcement powers.
Polymarket runs by doing transactions on a blockchain and settling them in USDC stablecoins. Notably, the infrastructure provided by blockchains allows for the faster and cheaper trading of prediction markets.
The platform is used to purchase “yes” or “no” positions, which are priced between $0 and $1. Therefore, probabilities are changing dynamically according to market demand.
Lower-probability jobs have higher potential gains with greater chances of loss. As occurs with equities, users may trade positions until outcomes are finalized.
Polymarket was launched as a company in 2020, founded by Shayne Coplan. Currently, the platform is estimated to have a valuation of around $9 billion.
Profits on cryptocurrency-based gambling are still subject to Portugal’s 28% capital gains tax. However, enforcement can and does become complicated in the absence of licensing oversight.
Overall, the Polymarket case is an important indicator of increasing regulatory pressure on crypto prediction markets. For its part, authorities can step up oversight with soaring volumes of political betting.
Source: https://www.livebitcoinnews.com/portugal-orders-crypto-prediction-market-polymarket-shutdown/
