Polymarket Plans In-House Trading Desk That Will Trade Against Users, Raising Trust and Legal Concerns
Polymarket is hiring an internal market-making desk that would trade directly against users, a move that critics say shifts the platform toward a sportsbook model and risks undermining its reputation as a neutral prediction market. Reports say Polymarket has been speaking with traders and sports bettors about building the desk; rivals such as Kalshi have made similar moves. Rutgers statistics professor Harry Crane told CoinDesk the change appears motivated more by revenue than product improvement and warned of limited upside, PR and legal risks (citing Kalshi and NoVig controversies). The desk could price and match parlays via an RFQ protocol, requiring capital and potentially giving the house an edge. Concerns include conflicts of interest, privileged access to order-flow or timing data, the erosion of market-driven probability signals that boosted Polymarket during the 2024 U.S. election cycle, and possible regulatory or class-action exposure. Polymarket did not respond to requests for comment. Key keywords: Polymarket, market making, prediction market, sportsbook, liquidity, RFQ, Kalshi, NoVig.
Bearish
The news is likely bearish for market sentiment around prediction-market platforms and could weigh on tokens or assets tied to Polymarket’s ecosystem. Introducing an in-house desk that trades against customers raises conflict-of-interest concerns and risks damaging the platform’s reputation as a neutral probability indicator — a key driver of user trust and liquidity. Short-term effects: increased uncertainty may reduce user activity and liquidity as traders withdraw or trade cautiously, widening spreads and lowering volume. Media scrutiny or legal actions (as seen with Kalshi and NoVig) could amplify volatility and prompt regulatory attention, further dampening trading sentiment. Long-term effects: if the desk functions like a sportsbook and captures consistent house edge, it may steady revenues but erode the platform’s informational value, reducing its appeal to informed traders and reporters who cited its market-derived probabilities during the 2024 election. That could permanently depress platform growth and any associated token values. Historical parallels: controversies over in-house counterparties (Kalshi class-action concerns, NoVig voided bets) show such moves attract litigation and negative PR, which correlate with declines in user trust and trading volume. Overall, the balance of reputation risk and limited revenue upside makes this development more likely to produce negative market reactions than positive ones.