NEW YORK, Nov 3 (Reuters) - Polymarket, the big US online prediction market, received the approval of a self-regulatory industry group for one of its units to become a broker, according to the company and the group, paving the way for the company to expand its operations if the government also signs off.
The National Futures Association (NFA) industry group granted the unit, PM Derivatives LLC, approval to operate as a futures commission merchant (FCM), according to the NFA's website and a Polymarket
statement.
Polymarket – a major online destination for those betting on Tuesday's midterm election results and other events – will still need approval from the US Commodity Futures Trading Commission for it to run an FCM broker.
The NFA's endorsement opens the door for further Polymarket expansion at a time when it and other prediction markets are facing scrutiny and legal headwinds. The markets allow traders to bet on real-world events, including sports, government policy announcements and elections.
Aided by supportive policies under President Donald Trump's second administration, the industry has surged over the past two years.
The FCM approval would give Polymarket, which currently runs a CFTC-registered exchange and an offshore platform, the license to act as an intermediary, carrying customer orders and funds. PM Derivatives plans to operate on a fully collateralized basis, with all positions funded in full at the time of trades, the company said.
In the statement, PM Derivatives Chief Executive Nikhil Joshi described the approval as a "foundational step" for the firm.
Polymarket has been a major player in prediction markets' surging popularity, but has faced government scrutiny over some of its marketing and other practices. The CFTC is currently investigating the firm.
(Reporting by Chris Prentice in New York and Douglas Gillison in Washington; Editing by Jonathan Spicer )
