Polymarket Bolsters Platform Liquidity with Internal Market-Making Team

Polymarket, a prominent prediction market platform, is gearing up to launch an internal market-making team, a move that could raise concerns about trading fairness and transparency. According to a Bloomberg report, the company has already reached out to professional traders, including sports bettors, about joining the team.

This initiative is part of Polymarket's strategy to expand its presence in the US market, following the resolution of significant regulatory hurdles. In 2022, the company settled a case with the Commodity Futures Trading Commission (CFTC) for a penalty of $1.4 million.

Notably, its main competitor, Kalshi, already operates a similar internal unit known as Kalshi Trading, which places bids on its platform to enhance liquidity. However, this arrangement has drawn criticism from some users, with a proposed class-action lawsuit alleging that the team manipulates betting lines to the detriment of customers.

Besides internal teams, both Polymarket and Kalshi seek to attract external participants to provide liquidity on their platforms. At Kalshi, companies such as Susquehanna International Group take on market-making roles.

CEOs' Perspectives: Divergent Views on Prediction Markets

Prediction markets, such as Polymarket and Kalshi, have experienced substantial growth in recent years, with both companies securing new partnerships and high private-market valuations as the sector expands. These platforms enable users to bet on a wide range of events, from sports to predicting the next day's weather in New York City.

During The New York Times’ DealBook Summit, Coinbase CEO Brian Armstrong argued that prediction markets' trading desks could strengthen the accuracy of such markets. He indicated that traders would benefit from "really good information" and "get a higher quality signal out of them.""

Conversely, BlackRock CEO Larry Fink did not express great enthusiasm for prediction markets. He stated: "We try to help people navigate a 30-year outcome. I don’t really care about what happens in the next moment. I’m aware in the betting market, in football, you can bet every play, but to me, this is not how I’m going to live my life."


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