Portugal prohibits Polymarket trading surge after presidential election

Portugal has recently joined the list of nations restricting access to the prediction market platform Polymarket due to concerns about regulatory compliance and insider trading activities. The move by Portugal’s gaming regulators comes after a surge in trading volume related to the country’s presidential election on Polymarket.

Two days prior to the January 18 election, the gambling regulatory body of Portugal, Serviço de Regulação e Inspeção de Jogos (SRIJ), directed Polymarket to voluntarily restrict access to its services within the country. Following Polymarket’s failure to comply, the SRIJ proceeded with a formal order to internet service providers to block access to the platform on January 19.

According to the SRIJ, Polymarket is operating illegally in Portugal, as the country’s laws only permit licensed operators to offer online sports betting, casino gambling, and betting on horse races. The SRIJ stated that Polymarket lacks the necessary authorization to conduct betting activities in Portugal, particularly in relation to political events, both domestic and international.

Although Polymarket remained accessible within Portugal until January 20, telecommunications company Vodafone Portugal blocked access to the platform on January 21 in response to the SRIJ’s directive. Kalshi, a competitor to Polymarket offering similar prediction market services, remained available in the country despite the restrictions on Polymarket.

The restrictions imposed by Portugal on Polymarket were influenced by suspicions of potential insider trading activities. Leading up to the presidential election, there were significant trades on Polymarket that indicated a possible manipulation of odds by individuals with non-public information. Substantial trades were made involving the leading candidates, resulting in drastic changes in their predicted outcomes just before the election results were announced.

Following the initial round of the presidential election, a runoff is required between the top two candidates, as no one received a majority vote. The candidates with the highest chances according to Polymarket, including António José Seguro and André Ventura, will compete in the next round of voting to determine the winner. The concerns about insider trading in the context of political events are not unique to Portugal, as similar incidents have been reported in other countries, including the United States.

In response to suspicious trading activities on prediction market platforms like Polymarket, legislators in the U.S. have introduced bills to prevent government officials and staff from leveraging non-public information for trading purposes. Recent incidents, such as the bets placed on Venezuelan President Nicolás Maduro’s removal before its public announcement, have prompted calls for increased oversight and regulatory measures to address potential abuses of prediction markets.

While Polymarket has faced regulatory challenges in various jurisdictions worldwide, it continues to operate in countries where it remains compliant with local laws and regulations. The incidents in Portugal and other countries highlight the need for robust regulatory frameworks and oversight to ensure the integrity and transparency of prediction markets in the rapidly evolving landscape of online trading platforms.