Polymarket, a New York-based startup operating in the burgeoning prediction market space, is taking a significant step that is raising eyebrows within the industry. The company is actively recruiting staff for an internal market-making team that would directly trade against its own customers on the exchange. This development comes as Polymarket seeks to re-establish its presence in the United States, several years after regulatory pressures forced it offshore.
A Strategic Move Amidst Regulatory Return
According to sources familiar with the private plans, Polymarket has recently approached traders, including experienced sports bettors, to join this new proprietary trading unit. The company declined to comment on the recruitment efforts. This push to create an in-house market-making capability coincides with Polymarket's cautious return to the U.S. market. The company had previously faced regulatory hurdles, resulting in a US$1.4 million penalty in 2022 to settle allegations of running afoul of rules before being pushed offshore.
Prediction markets like Polymarket and its chief rival, Kalshi, allow users to trade contracts on the outcomes of events ranging from elections to sports games. Their business model fundamentally relies on market makers—entities that provide liquidity by being willing to take the opposite side of both popular and unpopular trades. Without them, these platforms could not function smoothly.
Walking a Fine Line: Platform Neutrality vs. Conflict of Interest
Both Polymarket and Kalshi have experienced rapid growth in recent months, having received a green light from U.S. federal regulators. However, they face ongoing scrutiny from state officials who argue their activities constitute illegal gambling. A core part of their pitch has been platform neutrality; they present themselves as venues where people with opposing views can meet and trade, unlike traditional sportsbooks that set odds and profit directly from customer losses.
The creation of an in-house trading desk, however, blurs this distinction. Kalshi already operates a similar unit called Kalshi Trading. Company executives defend it as a necessary tool to create liquidity and improve the customer experience, claiming it operates with no preferential treatment and is not profitable. Yet, this very feature has exposed Kalshi to significant criticism and legal action.
A proposed class-action lawsuit filed in November 2025 alleges that Kalshi Trading sets betting lines that disadvantage customers, creating a fundamental conflict of interest. "When consumers place bets on Kalshi, they face off against money provided by a sophisticated market maker on the other side of the ledger," the complaint states. Critics argue this makes the platform resemble a traditional sportsbook, undermining its claims of neutrality. Kalshi co-founder Luana Lopes Lara has publicly dismissed the lawsuit as a "pure smear campaign."
The Broader Debate on Prediction Markets
Polymarket's move to build its own team places it squarely in the middle of this contentious debate. The company and Kalshi have both tried to attract external trading firms to provide market-making services, offering incentives to heavy users. A handful of established financial firms, including Susquehanna International Group and Jump Trading, have begun serving as market makers on Kalshi's exchange.
The questions surrounding proprietary trading are part of a larger conversation about the nature of prediction markets themselves. In a public appearance last month, Polymarket founder Shayne Coplan sharply contrasted his platform with traditional sportsbooks, which he called a "scam" that "rip[s] off the consumer." The success of this argument, and Polymarket's future in the U.S., may hinge on how it navigates the perceived conflict of operating a platform while also trading on it.
As Polymarket builds its internal team, the industry watches to see if it can avoid the same legal and reputational challenges currently facing its main competitor, or if this strategy will further fuel the debate over whether prediction markets are innovative financial platforms or simply gambling in a new technological guise.
