Colombia’s gambling regulator orders ISPs to block Polymarket

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2025/09/04: Commodity Futures Trading Commission gives Polymarket go-ahead for US launch 2025/06/09: Polymarket ties up with X as official prediction market partner 2025/04/23: Prediction markets platform Kalshi files lawsuit in Maryland 2025/05/20: Judge commits to move quickly on Kalshi Nevada judgment

The Backstory

Regulators diverge as Polymarket expands

Polymarket’s rapid push into mainstream finance has split regulators across jurisdictions. In the United States, the Commodity Futures Trading Commission effectively cleared a path for the platform’s relaunch, while Colombia’s gambling authority moved to shut it out. Colombia’s Coljuegos ordered internet service providers to block Polymarket for operating what it deems unauthorized betting on elections and other events, saying such activity falls under games of chance that require state authorization. The directive is part of a broader crackdown that has targeted tens of thousands of sites, a bid the regulator says protects a legal industry that funds public health programs. The action is detailed in Colombia’s gambling regulator orders ISPs to block Polymarket.

In contrast, the U.S. derivatives watchdog signaled accommodation after more than three years of friction with prediction platforms. The CFTC issued a no-action letter that lets Polymarket resume U.S. operations following a strategic acquisition, as reported in Commodity Futures Trading Commission gives Polymarket go-ahead for US launch. The opposing moves highlight a central tension: regulators who treat event contracts as regulated derivatives versus those who classify them as gambling and subject to licensing or bans.

Inside the no-action green light and the QCEX purchase

The U.S. turnabout traces to structure, not rhetoric. Polymarket acquired a designated contract market and clearinghouse, QCEX, in a reported $112 million deal designed to bring trading under federal derivatives rules and align clearing and surveillance with CFTC expectations. That restructuring underpins the agency’s no-action posture, which stops short of formal approval but indicates enforcement forbearance while the market operates within guardrails. The decision arrived Sept. 3 and reflected a pragmatic response to demand for event contracts across politics, sports and news, according to the report on Polymarket’s U.S. relaunch. The CFTC has framed prediction markets as a frontier for information discovery, even as some industry voices deride them as digital casinos.

The agency’s communication emphasized oversight through registered market infrastructure. For further context, see the CFTC’s announcement linked here: CFTC press release on Polymarket’s path via QCX. The approach aims to channel retail interest into a framework that enforces reporting, position limits and compliance programs comparable to other derivatives markets.

State-federal clashes shape the U.S. battlefield

Even with the CFTC’s stance, state regulators have challenged prediction platforms’ reach. Kalshi, a rival with a federal court win on election markets, has been fighting cease-and-desist orders from multiple states. The company sued the Maryland Lottery and Gaming Control Commission, arguing the state’s action is preempted by federal derivatives law and that its event contracts are swaps regulated by the CFTC, not wagering under state law. Details are in Prediction markets platform Kalshi files lawsuit in Maryland.

At the same time, a Nevada case underscores the stakes for sports and election markets. A federal judge pledged to move quickly on Kalshi’s suit against Nevada’s control board after the state labeled the platform’s products as unregulated sports betting. Kalshi counters that CFTC oversight preempts state gambling rules and allows offerings even where sports betting is not legal. See Judge commits to move quickly on Kalshi Nevada judgment for the procedural posture and potential implications for nationwide access.

These state challenges follow a pivotal federal development. The CFTC dropped its appeal after a judge in Washington, D.C., ruled Kalshi could list election contracts. The agency’s voluntary dismissal cemented the lower court’s decision, prompting criticism from some advocacy groups but reducing regulatory uncertainty for federally regulated event markets. The sequence is captured in CFTC drops Kalshi election betting appeal. Together, the cases create a patchwork: federal permission with pockets of state resistance, a dynamic Polymarket must navigate despite its QCEX-fortified model.

Building distribution: X partnership and a retail funnel

As regulators tussle, Polymarket is scaling reach. The platform became X’s official prediction market partner, integrating probabilities with X’s real-time data and Grok’s analysis. The collaboration gives Polymarket prominent placement where news breaks and opinion forms, turning social feeds into conversion funnels for event contracts. It also positions prediction prices as a competing signal to polls and punditry, a framing Polymarket has leaned on as it courts retail users and media visibility.

The growth story is not just distribution. Capital and endorsements have accelerated. The company added Donald Trump Jr. to its advisory board in a move meant to amplify political-market visibility, according to a PR Newswire announcement on strategic investment and board additions. User and volume figures have surged industrywide, with one roundup citing billions in traded volume and hundreds of thousands of active traders, underscoring momentum ahead of high-signal events like the U.S. presidential race. For a snapshot of market-scale metrics, see The Block’s report on Polymarket’s recent year.

The strategy reveals how prediction markets are evolving: pair regulated plumbing with mass-distribution partnerships to normalize event contracts as information tools. That makes regulatory clarity more consequential, because every integration into mainstream platforms increases retail exposure and potential cross-border conflicts where gambling rules diverge.

Global tension points and what comes next

Colombia’s action shows how global expansion can hit hard stops even as U.S. regulators soften. Coljuegos has already forced blocks on tens of thousands of sites and opened probes tied to illegal games of chance. The agency’s view that election and news-linked markets are equivalent to wagering directly contradicts the CFTC’s treatment of similar contracts as derivatives when traded on designated markets. The discrepancy sets up jurisdictional friction for platforms with global brands and digital distribution. Read more in the Coljuegos blocking order on Polymarket.

In the U.S., the risk shifts to a different arena: federal-state preemption. Kalshi’s litigation campaign suggests courts may continue to referee whether CFTC oversight displaces state gambling rules, especially on election contracts and sports-adjacent events. If federal wins hold and state injunctions fade, platforms like Polymarket could rely on national distribution backed by registered exchange status. If states prevail in key venues, access could splinter, curbing liquidity and eroding the informational value that prediction markets advertise. The contours of that fight appear across the Maryland suit, the Nevada case and the CFTC’s dropped appeal.

For Polymarket, the QCEX acquisition and no-action letter are the fulcrum. The structure gives the platform a compliance narrative as it onboards users through X and other channels. But the model will be tested by how far states push and how quickly international regulators adopt Colombia’s stance. If prediction markets are to be a permanent fixture in finance and media, the next phase will hinge on whether regulators coalesce around derivatives treatment or reassert gambling frameworks. The outcome will determine where these markets clear, who can trade them and how much signal they can produce when it matters most.