Polymarket’s path back to the United States

Polymarket, a blockchain powered prediction platform available at Polymarket, spent several years effectively barred from serving U.S. customers. In 2022, the U.S. Commodity Futures Trading Commission, or CFTC, ordered the company to halt unregistered event based derivatives trading for U.S. users and to pay a civil penalty. The platform wound down hundreds of markets and shifted its focus offshore while it reworked its regulatory approach.

That enforcement action made Polymarket a case study in the risks of operating event based markets without clear regulatory approval. At the same time, user interest in prediction markets continued to grow, especially around elections, macro data and sports.

CFTC approval and a new U.S. app

In late 2025, Polymarket secured an amended order of designation from the CFTC, clearing the way for a regulated U.S. comeback. The company acquired a licensed derivatives exchange and clearinghouse and now plans to route trading through intermediaries that fit into existing derivatives market plumbing.

On the back of that approval, Polymarket has started rolling out a new U.S. mobile app. The first wave of access is limited to users on a waitlist, with iOS support live and Android expected to follow. The initial product set focuses on sports event contracts, with the company signalling that it wants to add markets on broader topics – such as policy decisions and economic data – as the framework evolves.

Under this model, Polymarket is positioning itself less as an unregulated betting site and more as an exchange for event contracts supervised under federal derivatives rules. The contracts are structured as binary payouts based on the outcome of well defined events, and they clear through a regulated infrastructure stack rather than directly on an on chain venue.

How the new structure is supposed to work

The approved setup distinguishes between Polymarket as a venue and the intermediaries that give users access:

Registered futures commission merchants and brokerages can connect to Polymarket’s markets
End users access event contracts through those intermediaries rather than directly
Clearing and settlement are handled through a regulated clearinghouse that sits between counterparties

In theory, this intermediated model imports many of the controls familiar from traditional derivatives markets: margin practices, recordkeeping, reporting and supervision. It also creates a clearer distinction between federally supervised event contracts and unlicensed wagering.

Connecticut’s cease and desist orders against sports prediction platforms

While Polymarket is celebrating federal approval, state level regulators are taking a much tougher line with other prediction market and derivatives brands. In early December, the Connecticut Department of Consumer Protection, or DCP, issued cease and desist orders to three companies: Kalshi, Robinhood and Crypto.com.

All three were accused of conducting unlicensed online gambling in the form of sports event contracts. The DCP’s Gaming Division argued that these offerings amounted to sports wagering under state law, not investment products, and that only licensed sportsbook operators may offer such wagers in Connecticut.

The state’s press release highlighted several specific concerns:

The platforms lack state level licensing for sports betting
Technical, integrity and consumer protection standards required of licensed operators are not applied
Wagers may be marketed to individuals under age 21 or to people on voluntary self exclusion lists
House rules and dispute processes are not subject to local regulatory review

Connecticut ordered the firms to stop offering or advertising sports event contracts to residents, to allow in state users to withdraw funds and warned that non compliance could trigger civil penalties and even criminal exposure under gaming statutes.

Two different regulatory narratives

Taken together, Polymarket’s federal approval and Connecticut’s state level actions show how fragmented the U.S. rulebook is for prediction markets.

At the federal level, the CFTC’s decisions treat certain event contracts as derivatives that can be overseen within an exchange and clearinghouse framework. Polymarket’s new app and infrastructure are built around that model, with an emphasis on intermediated access, reporting and capital requirements.

At the state level, Connecticut is treating sports based prediction products as gambling. Its view is that a wager on a sports outcome is not an investment product even if it is structured as a financial contract, and that such wagers require a sports betting license and must follow state specific rules on age limits, advertising and consumer protection.

This split raises several open questions:

How far federal derivatives oversight can pre empt or coexist with state gambling laws
Whether sports event contracts will continue to be treated differently from contracts on non sports events such as economic data or elections
How exchanges and intermediaries will geofence, label and design products to navigate overlapping regimes

What it means for prediction market operators

For platforms, the message is that regulatory strategy is now a core part of the business model.

Polymarket’s approach has been to secure federal approval and to lean on a derivatives style structure. That does not automatically guarantee state level acceptance, but it does put the platform in a different category than unlicensed operators that have not aligned with any formal regime.

Kalshi, Robinhood and Crypto.com now face a period of negotiation and potential legal challenges in Connecticut. They will need to decide whether to:

Seek state sports wagering licenses for prediction style products
Restrict or redesign offerings to fall clearly outside state definitions of gambling
Exit certain jurisdictions entirely if regulatory expectations cannot be reconciled

The outcome of these choices will influence how easy it is for retail users to access prediction markets and whether these products remain concentrated in a small number of states.

Scenario based outlook for U.S. prediction markets

Given the current mix of approvals and enforcement, observers often frame the outlook in scenarios rather than as a single forecast.

Coexistence under a patchwork

In this scenario, federally approved venues like Polymarket continue to operate through intermediaries while states assert their authority over sports and local consumer protection. Platforms implement detailed geofencing and product segmentation, offering some contracts nationally and others only where state rules permit.

Prediction markets grow, but access feels uneven: users in some states can trade a wide range of contracts, while users in others see limited menus or no access at all.

Broader state level pushback

Here, more states follow Connecticut’s lead and issue cease and desist orders or guidance that treats sports and even some non sports event contracts as unlicensed gambling. Under this scenario, intermediaries become more cautious about routing customers into prediction products, and some platforms scale back their U.S. ambitions.

Growth continues in jurisdictions that take a more permissive approach, but national scale becomes harder to achieve without new federal legislation.

Clarification and harmonisation

A third scenario is that court decisions or policy initiatives create clearer boundaries between regulated derivatives style event contracts and gambling products. That might involve new safe harbours for certain types of prediction markets or explicit rules about which agency – federal or state – has primacy over different contracts.

If this happens, prediction markets could move from today’s experimental status toward becoming a more standardised asset class within brokerages and multi asset platforms.

What users and investors should watch

For traders, bettors and investors who follow prediction markets, several indicators will matter over the coming months:

How quickly Polymarket’s U.S. app expands beyond waitlisted users and sports markets
Whether additional brokerages integrate CFTC supervised event contracts into their offerings
The response of other states to Connecticut’s enforcement actions
Any court rulings that touch on whether event contracts should be treated as derivatives, gambling or both
Changes in product design, including contract limits, disclosures and consumer protections

Monitoring these developments can help clarify whether prediction markets in the U.S. are moving toward broader mainstream adoption or settling into a narrower, more tightly controlled niche.

Conclusion

Polymarket’s CFTC approved return to the U.S., complete with an intermediated app rollout, marks a significant milestone for regulated prediction markets. At the same time, Connecticut’s cease and desist orders against Kalshi, Robinhood and Crypto.com underscore that state level regulators remain sceptical of sports based event contracts and are prepared to treat them as unlicensed online gambling.

The contrast highlights a core reality for prediction markets in the United States: federal approval is necessary but not sufficient. Operators must navigate a layered system in which derivatives rules, gambling laws and consumer protection standards all intersect.

For now, the space is in transition. Whether prediction markets evolve into a widely accessible, regulated tool for aggregating expectations or remain a patchwork of geofenced products will depend on how platforms, regulators and courts resolve these tensions over the next few years.

The post Polymarket’s Regulated U.S. Comeback And Connecticut’s Crackdown On Prediction Markets appeared first on Crypto Adventure.

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Filed under: Bitcoin - @ December 4, 2025 12:25 pm