Crypto Prediction Markets Under Fire as Portugal Shuts Down Polymarket
Portugal’s gambling regulator has ordered Polymarket to shut down after more than €5 million was surged into presidential election markets hours before the results were officially announced.
Summary
- SIRJ, Portugal’s gambling regulator, ordered Polymarket to shut down after the platform wagered 103 million euros ($120 million) on the country’s presidential election.
- Portugal has strong regulations against betting on political events, and the regulator has given Polymarket 48 hours to cease operations.
- Polymarket is a decentralized, blockchain-based prediction market where users bet on the outcomes of real-world events, like elections, sports, economics, and culture.
What is Polymarket?
Polymarket is a decentralized prediction market built on the Polygon blockchain, allowing users to trade shares based on outcomes of real-world events using cryptocurrency, specifically USDC stablecoin. All transactions are publicly recorded on the blockchain, ensuring transparency and immutability. The platform hosts markets on a wide range of topics, including politics (elections), sports, economic indicators, pop culture, and technology.
Why was Polymarket asked to cease its operations?
In Portugal, betting on political events is illegal. The Serviço de Regulação e Inspeção de Jogos (SRIJ) is the regulating authority for gambling in Portugal. It permits both online and land-based gambling, but only through licensed operators or state concessions. According to the country’s 2015 online gambling law, only sports, casino games, and horse racing bets are allowed.
SRIJ ordered Polymarket to cease operations and face obstruction of its services as the platform’s activities violate national laws that prohibit political betting. The controversy is the timing of the wagering, which occurred just two hours before the official results were announced.
According to reports of the Portuguese outlet Renascença, the odds for the candidate António José Seguro dramatically rose from about 60% to almost 100% is a short time on Polymarket. On the other hand, his challenger, André Ventura, had only 30%.
One hour before the closing of the polls, at 6 pm, Seguro’s probability increased to 96%, finally reaching 100%, confirming his victory. The dramatic shift in the odds in favor of Seguro raised questions about whether some traders were using non-public, insider information to place bets. It would provide gamblers with an unfair advantage and undermine market fairness.
SRIJ’s New Compliance Measures
The Serviço de Regulação e Inspeção de Jogos (SRIJ) has only recently become aware of Polymarket and considers the platform’s activities “illegal”.
In Renascença, the regulator said, “The website is not authorized to offer betting in Portugal, and under national law, betting on political events or happenings, whether national or international, is not permitted.”
As Polymarket is an unlicensed platform and not overseen by the SRIJ, there is no guarantee that local users can recover their funds in case any issues arise or the platform is blocked.
On Friday, Polymarket received notification from SRIJ to cease all its activities in Portugal within 48 hours. However, the platform remained active on Monday, which prompted the regulator to notify network services to block it.
Which countries have blocked Polymarket?
As of now, Polymarket is blocked or restricted in over 30 countries. It has been banned in Ukraine, Singapore, and France. The platform is also facing block in Australia, Belgium, Germany, the US, Iran, and North Korea.
However, other prediction markets, such as Kalashi, Myriad, and Limitless, are still accessible in Portugal.
