Polymarket traders bet $220 million on US stocks while Washington argues over who polices it

By Strota Newsroom · 2026-09-29 · How Strota reports

Prediction markets, the platforms that let people bet on election results and football scores, have quietly moved into the stock market. Traders on Polymarket International have wagered more than $220 million across roughly 31,000 markets linked to equities since the platform began offering individual-stock markets last October, according to an analysis by blockchain research firm Allium prepared for a Reuters review.

The product is simple to describe. Instead of buying a share and owning a slice of a company, a trader buys a contract that pays out if a specified thing happens, or a specified level is reached, by a set date. If the contract is built around a company's share price or a corporate event, the wager and the stock are two views of the same underlying fact.

Almost 60 per cent of that activity sat in markets tied to individual stocks, with Nvidia, Alphabet, Apple and Tesla among the most actively traded names, Allium found. The remainder was linked to exchange-traded funds and stock indexes. Reuters also reported that Allium identified one wallet that generated about $175,000 of volume through roughly 1,300 Apple-related trades, using positions designed to produce a small profit whichever way the contract eventually settled.

Kalshi, the other large platform, has taken a different route. It does not currently offer contracts tied directly to individual stocks, but on a typical day it lists around 2,500 markets, including contracts on stock indexes and on corporate performance indicators such as product launches and vehicle deliveries, according to a Reuters review of its site and data supplied by the company.

That is where the regulatory problem starts. A market on whether a company will hit a production number is a bet on information that insiders hold first, and it sits outside the surveillance that regulated exchanges run over their own order books. Legal experts told Reuters that if equity-linked prediction markets keep growing they could eventually affect trading in the underlying shares and make misconduct harder to police.

The question of who owns these products is unresolved. The Commodity Futures Trading Commission argues that prediction markets are effectively derivatives and therefore fall under its remit. Calls are growing for the Securities and Exchange Commission to take the lead instead, because contracts tied to a single stock are generally treated in US law as security-based swaps, a category of derivative that is largely restricted to professional investors. Legal experts say some corporate performance contracts could fall into the same category, a reading Kalshi has disputed.

The two agencies jointly asked for public comment in June on how prediction markets should be regulated and whether one of them should be the primary supervisor. Traditional financial firms and consumer groups have argued that the SEC should lead, citing its experience with securities markets.

The insider-trading question runs alongside the jurisdictional one. A former SEC official, now directing securities policy at the nonprofit Better Markets, told Reuters that the same insider trading seen in shares could take place in these performance contracts, and that policing it is the securities regulator's job.

There is also a structural gap. Polymarket's international platform operates offshore and sits largely beyond the direct reach of US regulators, which a Georgetown University finance professor described to Reuters as the kind of thing regulators should be having nightmares about. Polymarket has said it monitors its markets for misconduct, refers cases to US authorities when appropriate, and works to block US users from the international platform. Its newer US exchange, regulated by the CFTC, does not offer individual-stock markets but lists a handful of performance contracts. The SEC declined to comment to Reuters and the CFTC did not respond to its questions; both have said they are reviewing the treatment of equity-linked prediction markets.

Lawmakers have started to weigh in. Senator Adam Schiff, a California Democrat, told Reuters that Congress should not allow the industry to sidestep America's securities laws by wrapping traditional financial products in the guise of prediction contracts.

For all the noise, the platforms are chasing the same customers as brokers. They pitch event contracts to institutions as alternative ways to hedge economic and market risk, and advertise round-the-clock trading that lets a user express several views on one company. What they do not offer, legal experts told Reuters, are the same protections and rights that come with a regulated exchange, and multiple studies show that the vast majority of traders in these products lose money.

For an investor who holds the underlying shares rather than a contract on them, the practical point is about boundaries rather than predictions. Two venues can now price the same corporate event, one inside the surveillance perimeter of a securities regulator and one largely outside it, and the growth of the second is what makes the first harder to supervise.

What the record does not establish is how far this goes. The equity-linked prediction market is still tiny next to the stock market itself, the June consultation has not produced a rule, and nothing in the reporting establishes that these contracts have moved any share price. The one thing the material is clear about is that a product that looks like a wager and behaves like a swap has arrived in the middle of markets that neither agency was designed to police alone.

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