Prediction markets Polymarket is hiring an in-house market-making team that will trade directly with clients — a shift that could blur the lines between prediction markets and traditional sports betting.
The company has recently held discussions with traders and sports bettors about setting up a new desk, Bloomberg reported, citing people familiar with the matter. A similar move was made by rival Kalshi, which defended its in-house trading team as a way to improve liquidity and user experience.
However, in practice, it is entirely possible to hire an external market maker, which raises questions about Polymarket’s true motives. The decision appears to be less about product improvements and more about revenue generation.
“They don’t charge a fee. They don’t make money. They want to find a way to monetize it,” Rutgers University statistics professor Harry Crane told CoinDesk.
Crane said Polymarket plans to offer parity through book-to-price agreements and price and match those bets in-house.
“These require significant capital support and, if executed correctly, can also bring huge advantages to the company,” he said. “I think it is short-sighted and ultimately a mistake, but time will tell.”
Few sources of income, high risks
Crane also questioned the financial logic behind the strategy.
“Given the huge valuation, it’s not a viable monetization strategy if that’s the goal,” he said. “Assuming the trading platform is profitable – which is far from a given – then the amount it can make is miniscule compared to its valuation.”
What’s more, Crane warned, the company couldn’t afford to have the desks damaged. also profitable.
“Companies should not want in-house trading teams to be overly profitable as this can create serious PR problems and possible legal issues,” he said. “Just look at the class action lawsuit against Kalshi for doing the same thing. That lawsuit seems 100% frivolous, but not positive on its face and PR.”
In addition to the legal risks, Crane believes the move harms Polymarket’s strategic position. “This reduces Polymarket’s chances of standing out from the competition, and the resources and focus it has put into it are definitely not the reason the company has gotten to this point.”
Shift to Sports Betting Model
This change makes Polymarket similar to sports betting, with users effectively transacting with the casino instead of other bettors. At sportsbooks, in-house traders set prices and build aggressively – often giving the operator a 5%–10% advantage.
Polymarket’s foray into this space could create a conflict of interest and unsettle punters who join prediction markets precisely because they no Sports Betting. The market will no longer reflect the collective wisdom of traders, but rather the pricing decisions of Polymarket’s internal departments.
It could also damage Polymarket’s reputation as a barometer of real-world probability. This reputation was a key engine for its rapid growth during the 2024 U.S. election cycle, when news outlets frequently cited Polymarket alongside polling data, boosting its mainstream legitimacy.
blur the lines and ask questions
Crane said sports betting comparisons underestimate the problem.
“Does it blur the line between prediction markets and traditional sports betting? Yes, but it’s worse than that,” he said. “In sportsbooks, it is well known that bookmakers are counterparties and will use every possible piece of information to gain an advantage over their customers. Exchanges should be different.”
“But whenever there are internal or privileged players on an exchange, there will always be suspicions that they are gaining an unfair advantage,” added Crane, noting that NoVig recently sparked a controversy in which it caused many winning bets to be invalidated because its in-house market makers were the losing counterparties.
The introduction of an in-house help desk also raises operational and ethical questions, reminiscent of the dynamics at FTX-Alameda. How much order flow or deposit timing data can the help desk access? Can it trade in advance of customer movement? Or does it simply post liquidity and charge spreads, as some exchanges claim?
Brand and trust at risk
While market making may create new revenue streams, this shift threatens the neutrality and trust that helped Polymarket rise. The company did not immediately respond to CoinDesk’s request for comment.
Fairness issues aside, Crane believes this strategy is simply misguided.
“It’s a bad business decision because it takes a platform that previously felt very new and different and makes it look and feel like other platforms,” he said.