Prediction market Polymarket is hiring an in-house market-making team that will deal directly with clients – a move that could blur the lines between a prediction market and a traditional sportsbook.
The company has recently been talking to traders and sports bettors about building the new desk, according to Bloomberg, citing people familiar with the matter. The move follows a similar move by rival Kalshi, which has defended its own in-house trading team as a way to improve liquidity and user experience.
In practice, however, it is entirely possible to employ external market makers, which raises questions about Polymarket’s true motivation. The decision seems to focus less on product improvements and more on generating revenue.
“They don’t charge fees. They don’t make money. They want to find a way to make money,” Harry Crane, a statistics professor at Rutgers University, told CoinDesk.
Crane said Polymarket plans to offer parlays through an RFQ protocol, with in-house desk pricing and matching bets.
“These require significant capital to support and also offer a significant benefit to the house if done correctly,” he said. “I think it’s short-sighted and ultimately a mistake, but time will tell.”
A small income stream with big risks
Crane also questioned the economic logic behind the strategy.
“Given the huge valuations, it’s not a viable strategy to make money if that’s the goal,” he said. “Assuming the trading desk is profitable – which is far from a given – the amount it can make money on is relative to its valuation.”
More importantly, Crane warned, the company can’t afford the desktop to be also profitable.
“The company should not want an in-house trading team to be too profitable as that will create significant PR problems and possible legal problems,” he said. “Just look at the class action lawsuit against Kalshi to do the same. That lawsuit appears to be 100% frivolous, but the optics and PR are not positive.”
In addition to the legal risks, Crane argued that the move undermines Polymarket’s strategic identity. “This diminishes Polymarket’s opportunity to differentiate itself from the competition, and it dedicates resources and focus to something that is definitely not what got the company to this point.”
A shift towards a sportsbook model
This change makes Polymarket look like a sportsbook, with users effectively trading against the house rather than other players. At a sportsbook, internal dealers set prices and expand energetically – typically giving the operator an advantage of 5-10%.
Polymarket’s foray into this space could create a conflict of interest and unsettle players who joined prediction markets precisely because they it wasn’t sports books. The markets would no longer reflect the collective wisdom of traders, but instead the pricing decisions of Polymarket’s internal desk.
It also risks eroding Polymarket’s reputation as a barometer of real-world probabilities. This reputation was a key driver of its rapid growth during the 2024 US election cycle, with news outlets routinely citing Polymarket alongside polling data, boosting its mainstream legitimacy.
Blurring lines and raising questions
Crane said the sportsbook comparison understates the problem.
“Does it blur the line between a prediction market and a traditional sportsbook? Yes, but it’s worse than that,” he said. “At a sportsbook, it is understood that the book is the counterparty and will use all the information it can to gain the advantage over its customers. Exchanges are supposed to be different.”
“But as long as there are insiders or privileged participants on an exchange, there will always be suspicions that they are gaining an unfair advantage,” Crane added, pointing to a recent controversy at NoVig, which voided a number of winning bets because its internal market maker was the losing counterparty.
The introduction of an internal desk also raises operational and ethical questions reminiscent of the FTX-Alameda dynamic. How much order flow or deposit time data will the desktop have access to? Could it act ahead of customer flows? Or will it simply post liquidity and collect spread as some exchanges claim?
A risk to fire and trust
While market making may create a new revenue stream, the shift threatens the perceived neutrality and trust that helped Polymarket rise to prominence. The company did not immediately respond to CoinDesk’s request for comment.
Questions of fairness aside, Crane believes the strategy is simply wrong.
“It’s a bad business decision that takes a platform that previously felt very new and different and instead makes it look and feel like everyone else,” he said.
