The world of prediction markets should be popping champagne after calling the US presidential election for Donald Trump – vindicating the forecasting power of betting markets over flawed polls. With a crypto-friendly administration incoming and a pivotal court victory allowing election markets, the stage seems set for the sector to thrive.
Yet instead of basking in validation, leading prediction markets Kalshi and Polymarket are mired in a sordid mudslinging contest that risks squandering the momentum. An exposé published Friday in Pirate Wires revealed that Kalshi, a regulated US-based platform, paid social media influencers to impugn the reputation of offshore crypto rival Polymarket and its founder Shayne Coplan.
Kalshi’s Coplan Crusade
According to screenshots obtained by Pirate Wires, Kalshi employees enlisted ex-NFL star Antonio Brown and other influencers to paint Coplan in a nefarious light following an FBI raid on his home earlier this month. Brown crudely suggested Coplan “seem[s] guilty” while another Kalshi-affiliated account drew parallels to disgraced FTX founder Sam Bankman-Fried – despite the investigation reportedly centering on unlicensed commodities trading, not fraud.
When reached for comment by CoinDesk, Kalshi CEO Tarek Mansour declined to address the allegations. Industry observers swiftly condemned the apparent smear tactics, with Bitwise Investments’ Jeff Park slamming Kalshi’s “moral hypocrisy” given its frequent touting of regulatory bona fides. The mud-slinging appeared to trigger retaliation, as accounts began circulating dubiously sourced claims that Kalshi itself faces a multi-agency probe.
Polymarket: “100% Not Us”
Polymarket firmly denied any involvement in spreading rumors about investigations into Kalshi. “100% not us,” a company spokesperson told CoinDesk via email. The unfounded speculation, possibly from partisan Polymarket supporters, underscores the unsavory turn the rivalry has taken.
“The Kalshi-Polymarket fracas comes at an otherwise fortuitous time for prediction markets.”
Election Vindication and Regulatory Thaw
Trump’s triumph over Kamala Harris, as foreshadowed by betting markets that consistently favored him despite poll-driven media narratives of a toss-up, demonstrated the predictive supremacy of financial incentives over cheap talk. An election-skeptical, deregulation-minded Trump administration bodes well for the future of political betting markets.
Meanwhile, the Commodity Futures Trading Commission led by outgoing chair Rostin Behnam abandoned a proposed ban on election betting after Kalshi prevailed in court to offer such markets. Polymarket asserts the Coplan raid was “political retribution” by the Biden CFTC for accurately calling the election – a provocative charge that could further motivate the incoming administration to back off.
Infighting Inopportune as Future Brightens
With the value of prediction markets gaining mainstream recognition and the regulatory climate poised to improve, the Kalshi-Polymarket spat is unfolding at a singularly inopportune time. Onlookers worry the backbiting could weaken industry solidarity and squander goodwill just as tailwinds are finally materializing.
“It’s tragic to see mud-slinging erupt right as prediction markets are proving their worth and prospects are brightening,” a veteran industry executive lamented to CoinDesk under condition of anonymity. “We’re on the cusp of a breakthrough, but juvenile antics could spoil the party before it starts.”
For Kalshi, which has long draped itself in a veneer of above-the-fray respectability afforded by CFTC oversight, the allegations of a sneaky smear campaign against a rival are especially damaging. The company may have irreparably tarnished its white-hat reputation and standing with regulators in a short-sighted bid to kneecap the competition.
With the very concept of prediction markets still unfamiliar to the mainstream and tenuously situated with regulators, self-inflicted reputational wounds and puerile drama are the last thing the embryonic industry needs. Kalshi, Polymarket and their peers face a stark choice: set aside petty differences to collectively seize an auspicious moment for the sector, or devolve into self-defeating skullduggery and risk snatching defeat from the jaws of victory. The integrity and prosperity of an innovative mechanism for harnessing the wisdom of crowds hangs in the balance.
