The French Polymarket whale won so much money that France is investigating the platform

My favorite story from this election cycle was that of the French Polymarket whale, “Théo.” On October 18, The Wall Street Journal reported that a group of four accounts on Polymarket, the popular crypto-based prediction market that operates outside the US, had collectively wagered $30 million on various bets supporting Donald Trump winning the presidential race. Most of the money was wagered on straightforward bets for Trump to win the election, but some money was placed on swing states and popular-vote results as well.

Two weeks later, the Journal interviewed the man behind these accounts: a Frenchman named Théo who had previously worked as a trader in the US. While there had been speculation that the “Polymarket whale” was attempting to manipulate the market to create the perception that Trump was outperforming poll data by bidding up his odds, Théo told the Journal that his intent was “just making money,” and he has “absolutely no political agenda.” He also, apparently, YOLO’d most of his liquid assets on the election bet:

“If Harris wins, Théo could lose most or all of his $30 million, which he described as the majority of his available liquid assets.

He is such a big trader on Polymarket that he is effectively stuck, unable to exit his wagers without crashing the market. The four ‘Trump whale’ accounts collectively hold about 25% of the contracts on Trump winning the Electoral College and over 40% of the contracts on Trump winning the popular vote, according to data provider Polymarket Analytics.” 

Anyway, Théo’s gamble paid off, and Bloomberg noted that the French trader is expecting to reap a total profit of approximately $79 million, making him the biggest winner on Polymarket’s leaderboard. Not bad! However, one group that took issue with the Frenchman’s Polymarket trade was France’s Autorité Nationale des Jeux (ANJ), the country’s gambling authority.

From Bloomberg:

“Online gambling is tightly regulated in France, although betting on sports and in poker games is permitted. Operating any new gambling market is subject to prior authorization from the ANJ, according to a government website.

‘We are aware of this site and are currently examining its operation and compliance with French gambling legislation,’ an Autorité Nationale des Jeux spokesperson for the regulator told Bloomberg News on Thursday. The ANJ is expected to ban access to Polymarket for French users, crypto news outlet The Big Whale reported late Wednesday.”

And here’s the quote from The Big Whale:

“‘Even if Polymarket uses cryptocurrencies in its operations, it remains a betting activity and this is not legal in France,’ [says] a source close to the ANJ.

‘Polymarket consists of betting money on something random, that’s strictly the definition of gambling, it’s like a sports bet,’ confirms William O'Rorke, partner at ORWL Avocats. ‘And unlike financial companies, the ANJ has the power to block the platform even though Polymarket does not specifically target French users,’ he continues.”

For context, Polymarket, which is headquartered in New York, does not currently operate in the US. In January 2022, the CFTC ruled that Polymarket had violated Commodity Exchange Act (CEA) and CFTC regulations by offering “swaps” on an unregistered exchange. Polymarket paid a $1.4 million penalty and shut down its US operations, moving overseas.

Meanwhile, Kalshi and Interactive Brokers both received approval from the CFTC to offer prediction markets in 2022 and 2024, respectively. Additionally, while the CFTC initially blocked betting markets on elections, a judge ruled in Kalshi’s favor, and Kalshi and Interactive Brokers subsequently listed their own election markets in the weeks leading up to the election.

While Polymarket had largely avoided international scrutiny until now, its recent popularity (the exchange processed $3.2 billion in election bets, including the tens of millions wagered and won by Théo) has put it on French regulators’ radar. If the ANJ does take action against Polymarket like the CFTC did two years ago, the prediction market may be forced to comply with regulatory frameworks that it has avoided since leaving the US market.