US Investors Secretly Fueling Billions in Offshore Prediction Markets: A Deep Dive into Bypassing Regulations

A groundbreaking new research report has unveiled a significant, clandestine financial flow: despite legal prohibitions preventing offshore prediction markets from serving US users, a substantial number of American investors are actively circumventing these blocks. They are leveraging technical means, primarily Virtual Private Networks (VPNs), to access and trade on platforms like Polymarket and Myriad Markets, fueling a shadow economy worth billions.

The Hidden Billions: Scale of US Involvement

The report, authored by Crane Zeng, estimates that a staggering $11 billion to $34 billion of the total transaction volume in offshore prediction markets originates from US users. Polymarket, a prominent decentralized prediction market, alone is conservatively estimated to account for $11 billion to $27 billion of this activity.

This hidden participation is not merely a fleeting trend; it’s projected to accelerate. The report forecasts that, assuming current market dynamics persist, the annual transaction volume by US users in offshore prediction markets could skyrocket to approximately $133 billion by 2030.

Explosive Growth and Trillion-Dollar Ambitions

The prediction market industry as a whole has witnessed “explosive growth” over the past two years, largely propelled by industry leaders such as Kalshi and Polymarket. These platforms offer a unique avenue for users to speculate on the outcomes of a vast array of events, ranging from major elections and central bank interest rate decisions to sporting contests and even celebrity gossip.

Wall Street investment bank Bernstein highlighted this burgeoning sector in an April report, predicting an astounding 80% Compound Annual Growth Rate (CAGR) for prediction markets. Their analysis suggests the overall market size could surge to a colossal $1 trillion by 2030, underscoring the immense potential and investor interest in this unconventional asset class.

Why the Offshore Allure? Anonymity and Decentralization

Crane Zeng’s research confirms what many within the industry have long suspected: overseas prediction markets have been “illegally” catering to US users. The primary method for these investors to bypass geo-restrictions is through the strategic use of VPNs.

While some non-blockchain platforms also operate discreetly outside CFTC oversight, the true engines of this underground market are decentralized protocols built on blockchain technology. Platforms like Polymarket, Opinion, and Limitless lead this charge. The report identifies critical factors driving this preference:

• No KYC Requirements: Decentralized platforms often do not mandate Know Your Customer (KYC) identity verification.
• Cryptocurrency Anonymity: The inherent anonymity offered by cryptocurrency wallets provides an added layer of privacy for users.

Data from Dune Analytics corroborates this, showing that approximately 12.5% to 31.5% of the total transaction volume in US prediction markets currently transpires on overseas platforms. During the analyzed period, a significant 30% of Polymarket’s transaction volume was attributed to US users operating behind VPNs.

A Shifting Landscape: Domestic Platforms Catch Up

Despite the dominance of offshore entities, a crucial and healthy trend is emerging for Wall Street to observe: compliant domestic US platforms are rapidly closing the gap with their international counterparts. The era of complete offshore hegemony is quietly dissolving.

Over a 12-month period detailed in the report, strictly CFTC-regulated domestic enterprises — including Kalshi, cryptocurrency exchange Crypto.com, Interactive Brokers’ ForecastEx, and Gemini — collectively processed an impressive $74 billion in transaction volume. Kalshi, a regulated US platform, was a dominant force, single-handedly accounting for $70 billion of this total. In comparison, the combined transaction volume of offshore platforms during the same period stood at $85 billion, indicating a narrowing disparity and a maturing domestic market.