Polymarket Plans In-House Trading Desk, Raising Concerns Over Neutrality and Risks
Polymarket is exploring the creation of an internal market-making desk that would trade directly against its users, potentially operating similarly to a sportsbook. This move, following Kalshi's establishment of a comparable in-house desk, aims to improve liquidity but poses considerable risks to Polymarket's neutrality and reputation.
Kalshi defends its in-house desk as beneficial for liquidity and user experience, yet industry experts remain cautious. Harry Crane, a statistics professor at Rutgers, highlights that Polymarket's plan might offer limited revenue potential while exposing the company to significant public relations, legal, and trust challenges arising from adverse optics and possible advantages from proprietary data.
Crane explains that the RFQ-based parlays would require significant capital and could provide the house with a meaningful advantage, which he calls a short-sighted approach. Even if such a desk proves profitable, the revenue is expected to be minimal relative to Polymarket's high valuation. Moreover, a highly profitable internal trading desk could prompt legal and PR issues similar to those faced by Kalshi.
Adopting a sportsbook-like model may create conflicts of interest and undermine Polymarket's foundational premise of markets reflecting collective wisdom. This shift risks eroding the platform's neutrality.
When contacted by CoinDesk, Polymarket has not publicly commented on this plan.
