Polymarket expands into private share bets (sort of)
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Illustration: Sarah Grillo/Axios
Polymarket last week launched prediction markets tied to "private company performance and milestones." Or, put more simply, betting on startup valuations.
Why it matters: This could expand investor exposure to the hockey stick phase of startup growth — including for IPO procrastinators like Stripe — albeit indirectly.
- It also could expand investor risk, since these companies aren't required to disclose financial performance or material events.
Yes but: These markets aren't yet being offered in the U.S., and maybe never will be.
- Polymarket didn't mention this in its press release, but confirms to Axios that the new product is available only via its offshore app. The unregulated one that U.S. residents regularly access via VPNs or other surreptitious means, but aren't supposed to.
The big picture: U.S. prediction market contracts — on everything from elections to baseball games — are regulated by the CFTC, which has taken a very light-touch approach under President Trump.
- Contracts tied to equity prices, however, constitute security-based swaps that would need to be regulated by the SEC.
- Moreover, it's possible that they only could be traded by "Eligible Contract Participants," which is the derivatives market version of being an accredited investor.
What they're (not) saying: Polymarket declined to say if it's having discussions with either the SEC or CFTC about allowing the private market "equity" contracts in the U.S.
- Also not commenting was Nasdaq Private Market, which is serving as Polymarket's "resolution data provider" for this offering. Instead, it referred all questions to Polymarket.
- NPM years ago spun off from Nasdaq, which retains an equity stake. Also worth noting that the New York Stock Exchange's parent company is a major Polymarket investor.
Look ahead: This feels like Polymarket testing the regulatory waters, in case the SEC mimics the CFTC in being a prediction markets pushover.
- A wildcard could be growing bipartisan criticism — often in response to "offshore" bets via Polymarket — which at some point may cause Trump to adjust his laissez-faire posture.
