Polymarket is pursuing regulatory approval to offer margin trading on event contracts in the United States, a move that would let traders open positions with less capital upfront while adding leverage and risk to the prediction market ecosystem. The filing marks a significant step toward making prediction markets function more like institutional derivatives trading, even as regulatory approaches diverge sharply between Western nations and Asia.

What Is Margin Trading in Prediction Markets?

Margin trading allows bettors to open positions without fully backing them with cash upfront. Instead of depositing the full amount needed for a bet, traders can open larger positions with a smaller initial deposit, making their capital more efficient. However, this leverage cuts both ways: profits can grow faster, but losses can also accumulate more quickly when trades move against a position.

Polymarket filed an application to operate as a futures commission merchant through its affiliate, Coming Home GBA LLC, according to Bloomberg reporting cited in the sources. A futures commission merchant license is foundational infrastructure for margin trading, but the company would still need approval from the Commodity Futures Trading Commission (CFTC) to change its rulebook and allow non-fully collateralized trading.

If approved, Polymarket would move closer to its main US rival, Kalshi, which received its own futures commission merchant license earlier in 2026. Kalshi has already expanded into more complex products, including perpetual futures on crypto assets, and recorded more than 5.5 billion dollars in trading volume within two weeks of launching those products.

How Does Regulatory Approval Shape the Prediction Market Landscape?

• US Approach: American regulators have allowed regulated event contracts to coexist with crypto exchanges, creating a legal framework for prediction markets to grow. Kalshi operates as a designated contract market under the CFTC, and partnerships with mainstream platforms like CNN and Robinhood have given event contracts significant mainstream acceptance.
• Asian Bans: Countries across Asia treat prediction markets as unlawful gambling. Singapore's Gambling Regulatory Authority took enforcement action against Polymarket in January 2025, Taiwan restricted the platform during the 2024 presidential elections, and Thailand ordered internet service providers to censor it. China continues its long-standing ban on all gambling and cryptocurrency platforms.
• Regulatory Uncertainty: The legal conversation in the United States still centers on whether federal commodities laws take precedence over state gambling regulations, a question that may eventually reach the Supreme Court.

Where Is Prediction Market Volume Flowing?

The divergence in regulatory approaches is creating a clear geographic split in prediction market activity. Asian restrictions are not stopping demand; they are simply pushing users and trading volume to international platforms based in the West.

According to blockchain intelligence firm TRM Labs, transaction volumes in prediction markets were around 1.2 billion dollars per month at the beginning of 2025 and increased to over 20 billion dollars in January 2026, with approximately 840,000 active wallets involved. Web3 research firm Tiger Research estimates that crypto-native platforms like Polymarket see more than 14 billion dollars in monthly trading volume, with industry leaders holding an overall value of 40 billion dollars.

Despite strict gambling regulations in South Korea, a domestic betting exchange called Opinion has surpassed a 2 trillion-won mark in weekly trading volume since its inception, demonstrating that regulatory restrictions do not eliminate demand but instead redirect it to less regulated channels.

"Relying on gambling prohibitions may lead to a loss of capital, liquidity, and innovations as other regions adopt regulated prediction-market frameworks," stated Tiger Research in its analysis of the Asian regulatory landscape.

Tiger Research, Web3 Research Firm

Polymarket has expanded the list of countries where its platform is not available to include Singapore, Taiwan, Thailand, Iran, Iraq, Lebanon, Myanmar, North Korea, Syria, and Yemen. Users in Singapore, Taiwan, and Thailand are only allowed to close existing positions and cannot place new bets.

What Concerns Do Experts Raise About Prediction Markets?

Even as Western regulators move toward frameworks that allow prediction markets, some financial experts and former regulators have raised concerns about the structure and oversight of these platforms. Former SEC Commissioner Joseph Grundfest cautioned that highly specific event contracts can make insider trading feasible and argued that Polymarket does not have anti-money laundering or know-your-customer regulations that are mandatory for financial markets in the US.

"Prediction markets are sports gambling wrapped in finance," warned Thomas Braziel, a distressed-asset investor, adding that it is a matter of time before venture capital starts regretting its investments because of the high level of regulatory uncertainty.

Thomas Braziel, Distressed-Asset Investor

Regulators in the US have also called for tighter oversight in the wake of insider-trading scandals involving event-driven contracts. The tension between treating prediction markets as financial instruments versus gambling products remains unresolved in many jurisdictions.

As Polymarket pursues its margin trading license and Kalshi continues to expand its product suite, the prediction market industry is consolidating around a regulated Western model while Asian countries face pressure to reconsider whether decades-old gambling laws are the right tool for overseeing one of the fastest-growing segments of the crypto economy.