Predictions marketplace Polymarket is in the process of hiring an in-house market-making team that will deal directly with clients, a move that could blur the lines between a predictions marketplace and a traditional bookmaker.
The company recently spoke with traders and sports bettors about building the new table, according to Bloomberg, citing people familiar with the matter. The move follows a similar move by rival Kalshi, which has championed its own in-house trading team as a way to improve liquidity and user experience.
In practice, however, hiring external market makers is entirely possible, raising questions about Polymarket’s true motivation. The decision appears to focus less on product improvement and more on generating revenue.
“They don’t charge fees. They don’t make money. They want to find a way to monetize,” Harry Crane, a statistics professor at Rutgers University, told CoinDesk.
Crane said Polymarket plans to offer parlays through an RFQ protocol, with internal desk pricing and matching of those bets.
“These require significant capital to back them and also offer substantial house upside if executed correctly,” he said. “I think it’s short-sighted and ultimately a mistake, but time will tell.”
A small income stream with huge risks
Crane also questioned the financial logic behind the strategy.
“Given the huge valuations, it is not a viable strategy to monetize, if that is the goal,” he said. “Assuming the trading desk is profitable – which is far from a given – the amount it can earn is a pittance compared to its valuation.”
More importantly, Crane warned, the company can’t afford to make the desktop also profitable.
“The company should not want an in-house sales team to be too profitable, as that will create significant public relations problems and potential legal problems,” he said. “Just look at the class action lawsuit against Kalshi for doing the same thing. That lawsuit appears to be 100% frivolous, but the optics and public relations are not positive.”
Beyond 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 dedicates resources and focus to something that is definitely not what got the company to this point.”
A shift towards a sports betting model
This change makes Polymarket resemble a betting house, where users effectively trade against the house instead of other bettors. At a sportsbook, in-house traders set prices and accumulate vigorously, typically giving the trader a 5% to 10% edge.
Polymarket’s foray into this territory could create a conflict of interest and unsettle bettors who joined prediction markets precisely because they were not betting houses. Markets would no longer reflect the collective wisdom of traders but rather the pricing decisions of Polymarket’s internal desk.
It also risks eroding Polymarket’s reputation as a barometer of real-world probabilities. That reputation was a key driver of its rapid growth during the 2024 US election cycle, when media outlets routinely cited Polymarket alongside polling data, boosting its widespread legitimacy.
Blurring lines and raising questions
Crane said the bookmaker comparison underestimates the problem.
“Does it blur the line between a prediction market and a traditional sportsbook? Yes, but it’s worse than that,” he said. “In a bookmaker it is perfectly understood that the bookmaker is the counterparty and will use all the information it can to gain an advantage over its customers. The exchanges are supposed to be different.”
“But as long as there are insiders or insiders in an exchange, there will always be suspicions that they are getting an unfair advantage,” Crane added, pointing to a recent controversy at NoVig, which voided a series of winning bets because its in-house market maker was the losing counterparty.
The introduction of an internal office also raises operational and ethical questions reminiscent of the FTX-Alameda dynamic. How much data about order flow or deposit timing will the desktop have access to? Could you stay ahead of customer flows? Or will it simply post liquidity and charge spreads, as some exchanges claim?
A risk for the brand and trust
While market-making may create a new revenue stream, the change 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 to take a platform that previously seemed very new and different and instead make it look and feel like everyone else,” he said.
