Entertainment predictions are booming, but Polymarket is being targeted by an old law

Polymarket becomes a focal point for sponsoring the Golden Globe Awards but unexpectedly steps into a historical minefield of U.S. financial regulation. This is not merely a compliance issue but a confrontation with the 1958 Onion Futures Act. As the prediction market industry heats up with trading activity, regulatory risks are quietly approaching.

Why Old Laws Are Reappearing

The Historical Origins of the Onion Futures Act

The root of the issue dates back to the 1950s. At that time, the U.S. onion futures market was embroiled in a classic manipulation scandal—businessman Vincent Kosuga controlled spot supplies and simultaneously shorted futures, ultimately causing onion prices to collapse. This scandal angered Congress, which decided to ban onion futures trading outright, making onions the only commodity in U.S. history to be permanently prohibited from futures trading.

Although the 1958 law seems outdated, it was revised in 2010, expanding its scope. The amendments explicitly prohibit derivatives trading based on movie box office revenue or related indices. The legislative intent is clear: to prevent market manipulation and industry distortion.

The Red Line Polymarket Crossed

According to the latest news, Polymarket appeared during the Golden Globe Awards as an “exclusive prediction market partner,” participating in live broadcasts and pre-show programs, attracting hundreds of thousands of dollars in bets on award predictions. The problem is that multiple independent contracts linked to movie box office revenue appeared simultaneously on Polymarket’s website. This precisely triggers the prohibited zone under the Onion Futures Act amendments.

Platform Evasion Strategies and Risks

The Gray Area of “Regional Layering” Compliance

Polymarket has adopted a clever but risky approach—regional layering. The version accessible to U.S. users is regulated by the U.S. Commodity Futures Trading Commission (CFTC) with limited functionality; meanwhile, contracts related to movie box office predictions only appear on overseas platforms targeting non-U.S. users.

This strategy was tested as early as 2022. That year, Polymarket was required to exit certain U.S. markets due to compliance issues and paid fines. However, the platform seems to have found a formal loophole—so long as U.S. users cannot participate in these markets, the platform remains technically on the “gray compliance” edge.

The Unignorable Risks

Legal experts point out that the vulnerability of this strategy lies in regulatory penetration. If regulators discover access loopholes or U.S. users participate via VPNs or other means, the risks will escalate immediately. More importantly, as the prediction market industry explodes, regulatory attention is also increasing.

Industry Boom vs. Regulatory Dilemma

The Boom of Prediction Markets

According to relevant reports, the prediction market industry is experiencing rapid growth. Kalshi hit a record high trading volume during the NFL playoffs, with bets exceeding $900 million just last weekend. Polymarket’s trading fees contributed over $100,000 in 24 hours, and protocol fee income over the past few days has surpassed $1.7 million.

This growth even threatens traditional sports betting companies. Shares of DraftKings and Flutter Entertainment have fallen 14.5% and 21% respectively over the past year, as both develop their own prediction markets to compete.

Increasing Regulatory Pressure

Contrasting the industry’s prosperity is the rising regulatory pressure. Although a federal judge temporarily paused the Tennessee ban on Kalshi, it is only a temporary measure, with a preliminary injunction hearing scheduled for January 26. Several states are attempting to impose restrictions on prediction markets, and the CFTC’s stance remains under observation.

Uncertain Future Directions

Polymarket’s expansion plans are underway—latest reports indicate the platform is developing a Chinese version to further expand into global markets. However, this expansion runs parallel with regulatory risks.

From a regulatory perspective, U.S. authorities face a dilemma. On one hand, the accuracy of predictions in political, economic, and sports fields has been proven, demonstrating their informational value; on the other hand, laws like the Onion Futures Act remain in effect, and their original intent to prevent market manipulation still applies.

Polymarket’s expansion into entertainment prediction markets hits right on the most sensitive red line of U.S. financial regulation history. Its future trajectory remains uncertain until regulatory attitudes become clearer.

Summary

Polymarket’s sponsorship of the Golden Globe Awards appears to be a crossover between the entertainment industry and crypto prediction markets, but it actually exposes a deeper issue: the collision between ancient financial laws and emerging industries. Although the Onion Futures Act was enacted in 1958, its revised provisions banning movie box office derivatives are still valid.

The platform’s “regional layering” strategy technically evades U.S. regulation, but the risk of regulatory penetration remains—regulatory circumvention is always possible. Meanwhile, the booming prediction market industry is attracting regulatory attention, signaling that the entire sector faces a moment of regulatory clarification. The future regulatory stance will be decisive for Polymarket and the prediction market industry as a whole.