The Commodity Futures Trading Commission has published a comprehensive 267-page proposed framework for regulating prediction markets, but the rules apply only to domestic platforms operating under federal oversight while leaving offshore competitors entirely unaddressed. Kalshi, the main US-regulated venue, now faces potential restrictions on certain contract types including sports markets, while offshore platform Polymarket remains outside the framework’s scope entirely.
New research from Crane & Zeng Consulting estimates that approximately thirty percent of Polymarket’s fifty-six billion dollars in trailing twelve-month volume originates from US-based users, representing between eleven and thirty-four billion dollars in annual offshore activity. The broader offshore prediction market ecosystem processed roughly ninety-four billion dollars compared to seventy-four billion on CFTC-regulated platforms during the same period, maintaining a volume advantage despite explosive growth in the regulated sector.
Kalshi’s co-founder warned in an April comment letter that restricting regulated exchanges without addressing offshore access would simply drive more trading activity beyond regulatory reach. The concern appears well-founded given the volume disparity. While CFTC-regulated platforms saw volume growth of 866 percent between 2024 and 2025, far exceeding the 179 percent growth offshore, the total addressable market remains split between compliant and non-compliant venues.
For brokers and fintech firms considering entry into prediction markets, the regulatory landscape presents a significant competitive disadvantage for compliant operators facing costs and restrictions that offshore platforms avoid entirely.
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FXnCO Insight
** Regulatory arbitrage continues to undermine investor protection frameworks when enforcement capability stops at jurisdictional borders while customer access does not.
Source: Finance Magnates