(Bloomberg) — A few years after dropping out of New York University with dreams of making it in the cryptocurrency world, Shayne Coplan was so broke that he took inventory of his Lower East Side apartment to sell belongings and pay the rent.
Tired of fraud in the crypto world, in 2019 he began exploring economist Robin Hanson’s ideas about prediction markets and their potential to improve society’s ability to identify likely outcomes.
“This is too good an idea to just be in academic articles,” he recalled in a later post on X. Then came Covid — the perfect time to develop an app for people stuck at home to bet on real-world outcomes, he reasoned. He started building Polymarket in his bathroom and launched the platform in June 2020.
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It wasn’t an easy path. The company’s move-fast, permission-later approach repeatedly ran afoul of regulators, who forced it to ban U.S. users for years because it was not a registered exchange. A week after the 2024 presidential election — in which Polymarket users bet more than $3 billion — Coplan’s apartment was raided by FBI agents.
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But he and his company are now riding high after Intercontinental Exchange Inc., owner of the New York Stock Exchange, announced it will invest up to $2 billion in Polymarket, valuing the company at $8 billion before the investment. This deal makes the 27-year-old founder the youngest self-made billionaire tracked by the Bloomberg Billionaires Index.
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A Polymarket spokesperson declined to comment.
Forecasting companies like Polymarket allow users to bet on the outcomes of various events, such as elections, whether the Federal Reserve will cut interest rates, or who Time magazine’s person of the year will be.
They are also becoming increasingly popular as a place for sports betting. Because U.S. prediction markets are regulated by the Commodity Futures Trading Commission, their supporters argue that they sell financial products tied to the outcome of sporting events, not sports betting, allowing them to evade state bans on sports gambling. They are also able to avoid certain federal and state taxes applied to sports betting revenue.
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In August, rival Kalshi began offering bets on prediction markets through a partnership with brokerage Robinhood Markets Inc. The electronic brokerage said more than 2 billion prediction contracts were traded in the third quarter.
Shares of gaming companies Caesars Entertainment Inc. and DraftKings Inc. fell more than 5% on Tuesday after the deal was announced.
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Legal risk
Polymarket suffered a major setback in 2022 when it paid a $1.4 million fine to settle a case with the CFTC for offering illegal trades. Without admitting or denying wrongdoing, the company agreed to block US users going forward.
But regulators suspected that Polymarket continued to host U.S. users on the site, and in November, a week after Election Day, FBI agents raided Coplan’s home before dawn and seized electronic devices. The company called the action “obvious political retaliation.”
The Justice Department and CFTC closed their investigations in July. In the same month, Polymarket acquired CFTC-licensed exchange and clearing house QCEX for $112 million, allowing it to legally resume operations in the US.
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The company raised at least $255 million before ICE’s investment, according to Pitchbook data. Investors include Peter Thiel and his Founders Fund, Ethereum founder Vitalik Buterin and investment firm Blockchain Capital.
Another notable investor is 1789 Capital, which invested in Polymarket before the 2024 election and again this year. As part of this agreement, Donald Trump Jr., son of President Donald Trump and partner at 1789, joined the company as an advisor in August. He also advises Kalshi.
The company’s ties to Washington could deepen with ICE’s investment. ICE CEO Jeffrey Sprecher is married to Kelly Loeffler, a former senator who heads the Small Business Administration and is a member of Trump’s cabinet.
(Adds stock movement in 10th paragraph. Previous version corrected the spelling of Polymarket in the fourth paragraph before the end.)
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