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During my first evening at Blockworks’ Permissionless conference, I engaged in a new kind of small talk fodder among crypto folk: Polymarket odds.
Infinex founder Kain Warwick had around a 70% chance to win his Karate Combat bout with David Hoffman, the Bankless podcast host roughly ten years his junior. We scoffed at the market’s confidence in a fighter on the wrong side of 40.
Prediction markets are the crypto world’s recent fascination, and although I had written (skeptically) about them, I hadn’t watched one resolve in real time. That would all change by Friday night, as two crypto figures made their amateur boxing debuts, and crypto fans responded in the way they know best.
The looming boxing match’s odds were a subject of conversation during the three-day event, and whispers of Warwick’s training regimen and size seemed to keep him in the lead. At the match itself though, someone next to me lamented loudly that they didn’t have a VPN on their phone. Polymarket isn’t technically available in the US, though it’s safe to assume there were a fair number of Hoffman-Warwick bettors who skirted that particular regulation.
Prediction markets currently operate in a legal gray area in the US. Although the non-crypto prediction market Kalshi won a legal victory against the CFTC earlier this month, the case is now headed to appeals.
Following a 2022 CFTC spat of its own, Polymarket, which is the largest crypto prediction market by far, does not allow bets to come from inside the United States. Solana-based Drift also restricts US users on its BET product.
Some smaller prediction markets take the social media age verification approach to geofencing, by which I mean they ask users to self-verify that they are not in the US.
On the evening of Hoffman and Warwick’s fight, I craned my neck to see the two crypto guys exchange awkward jabs and kicks. After Hoffman landed some blows in the first round, I heard someone behind me remark that his Polymarket odds had shot up.
“I wish they would display the Polymarket odds on the screen,” the onlooker added.
When Hoffman won in a majority decision, someone near me was aghast at seeing his $250 bet on Warwick slip away.
Walking away from the fight, I don’t feel differently about some of prediction markets’ fundamental flaws: They haven’t proven their stickiness outside of election betting, and there are better ways to trade most news events.
But I think there’s still a reasonable business case for something like Polymarket. Crypto rails can make betting markets run more smoothly, and Polymarket has a better UX than its competitors. Plus, an inclination toward decentralization could help address some of the issues in other betting markets, such as limiting successful bettors’ accounts.
And as the $65,000 bet on two non-boxers trading clumsy blows proves, the crypto world really likes to speculate. Bet against that fact at your own peril.