Polymarket: The low-key 26-year-old dropout founder and the regulatory challenges he faces

Author: Jeff John Roberts, Niamh Rowe, Fortune; Translator: 0xxz@Golden Finance

Every election cycle seems to introduce a new prediction star.

In 2008, CNN's John King and his "magic wall" of colorful election data came out. Later cycles saw the rise of "the two Nates" (Nate Silver and Nate Cohn), whose statistical journalism made gimmicks like the New York Times' prediction needle a fixture of political coverage.

In 2024, all eyes turned to the new election year darling: the Polymarket website.

The blockchain-based betting site has become a go-to for politicians because it has repeatedly predicted major election developments in advance. In the past few months, for example, Polymarket predicted that President Joe Biden would abandon his reelection bid and Donald Trump would choose JD Vance as his running mate. The site's reputation has grown, and Nate Silver himself has agreed to join the company as an advisor.

Polymarket founder Shayne Coplan is little known outside of cryptocurrency circles, a 26-year-old New York native who, by the looks of his face, should be touring with an alternative rock band rather than running one of the most influential websites in contemporary politics.

Coplan has so far avoided the spotlight, but that may change in the near future as Polymarket (which has raised $70 million in funding) continues to gain more visibility in U.S. politics.

Polymarket founder Coplan

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At a recent dinner in Manhattan, Coplan was wearing jeans and a leather jacket. He was invited by a venture capital firm that convened startups in its portfolio to communicate with members of the media. Coplan was easily recognizable because of his messy curly hair and casual demeanor, which was very different from other founders.

While venture capitalists like to say that they don’t have favorite portfolio companies, organizers were careful to point out that “the Polymarket team” was the most worth getting to know. Coplan, however, seemed in no rush to make the rounds, and after a few polite words, he left as the entrees were served, apologetically announcing that he was off to a concert in Brooklyn.

Coplan knows New York well. Raised by his mother, he grew up on the Upper West Side and attended public school in Hell’s Kitchen, near the theater district. As a teenager, he learned to program, and according to crypto lore, he was the youngest participant in the initial Ethereum sale in 2014—at the time, the token was priced at 30 cents, and today it trades for about $3,500. Coplan later pursued a computer science degree at New York University but dropped out before graduation to pursue his growing obsession: cryptocurrencies and prediction markets.

“He wants to talk about it forever. It’s his life. He lives by it,” said Rob Hadick, a partner at venture capital firm Dragonfly, which is also an investor in Polymarket. He added that instead of a formal pitch in a conference room during their initial meeting, Coplan proposed a walk, which turned into a two-hour stroll through New York City, during which Coplan kept talking about prediction markets in Hadick’s ear.

As books such as The Wisdom of Crowds explain, using collective predictions to determine the likelihood of future events is often more reliable than consulting experts. The concept is not new, and in fact, variations of it — including market-based prediction markets — have been around for centuries. While there are other online betting platforms, such as Ireland’s Paddy Power, which allow users to bet on everything from sports to politics, Coplan said Polymarket is different.

“It’s more like a derivatives platform, where the pricing of those derivatives becomes priceless real-time information,” Coplan said in a text message, noting that odds are determined continuously by a group of bettors rather than by a centralized oddsmaker. (Polymarket is also known for using smart contracts to settle and pay out bets — specifically, through Polygon, a sublayer of the Ethereum blockchain.)

In recent months, Coplan has had the opportunity to speak directly to politicians about the benefits of his site, including over breakfast with Florida Gov. Ron DeSantis. Last week, he also retweeted a tweet showing images of the site displayed around the Republican National Committee’s headquarters — but he has been careful to avoid revealing his political leanings so far.

When asked for a formal interview — one he hasn’t done since Polymarket first gained attention in 2020 — Coplan politely declined, citing a busy schedule.

Coplan’s online presence is minimal. A few photos online show a 20-year-old Coplan without curls, giving a cryptocurrency speech at the 2018 Bitcoin Miami conference and taking a boat cruise. But otherwise, he has avoided media attention—although, as Polymarket becomes a household name, he may no longer have that luxury.

Bet on an uncertain future

Most people are familiar with online betting sites, both American sportsbooks and overseas, which allow gamblers to bet on everything from elections to the odds of alien landings. Polymarket offers all of those bets, too, but its inner workings are very different.

The probability of a particular event is determined not by a centralized oddsmaker but by Polymarket users, who can buy “shares” of a particular outcome. On July 31, for example, someone who believes Donald Trump will choose JD Vance as his running mate can pay 8 cents and see the value of their contract rise to $1 if that happens (or drop to zero if it doesn’t happen by the time of the election). Prices, of course, fluctuate with news events.

For now, Polymarket has declined to pursue the most obvious potential revenue stream: taking a cut of bets placed on the site. Instead, its evolving business model, which includes a forthcoming feature that lets users pay with credit cards instead of cryptocurrencies, appears to involve a media business and, possibly, a consulting business. Semafor reported this week that Polymarket is launching a series of newsletters, while also working with major media outlets to include its data in stories (a chart from the site has already appeared in The Wall Street Journal). The company hasn’t said how much revenue, if any, it will make from those investments.

Polymarket may also charge fees for bets that appear on its site. Currently, the company collects suggestions on its Discord platform and then notifies its community which ones will be added. Some of the most recently added bets include bets on Simone Biles’ medal count and the likelihood of a U.S.-Iran military conflict by Aug. 31. There’s no sign, though, that Polymarket plans to let companies pay to list bets.

Polymarket shares become the hottest bet?

Polymarket isn’t the first site of its kind. Earlier crypto projects like Augur and Gnosis similarly offered a decentralized betting platform, but they never gained traction. Polymarket, by contrast, has become a fixture on political Twitter and is the top site for online bettors on the outcome of the U.S. presidential election (85%), according to Nick Tomaino, whose venture fund 1Confirmation has invested in all of these projects. The site’s rapid growth — it attracted a record 42,000 bettors on July 1, up from 4,000 in January — is perhaps surprising, since betting on the election is illegal in the U.S., American bettors are barred from using the platform, and Polymarket requires users to connect a crypto wallet and pay with the USDC stablecoin. These obstacles also raise the question of whether Polymarket bettors, who are mostly non-Americans steeped in crypto culture, can make reliable predictions about U.S. election events.

Tomaino acknowledged that the sample would be better if Americans were able to participate, but he said Polymarket still provides a very strong signal. That’s because, like other prediction markets, it not only reflects the “wisdom of the crowd,” but is also based on a group of people who have a financial stake in the outcome and are likely to be more knowledgeable.

In evaluating Polymarket and various betting markets, it’s also useful to remember that the possible outcomes they show are just probabilities. In 2016, most pollsters and betting sites gave Hillary Clinton a 75% to 85% chance of winning. The fact that she lost didn’t discredit those predictions, but rather reflected the smaller but very real possibility of Donald Trump winning, which has come true.

Polymarket is not only a striking new addition to the U.S. electoral scene, it’s also a hot startup that has raised $70 million to date, including a $45 million round in May, from influential investors. They include not only cryptocurrency moguls like Ethereum founder Vitalik Buterin and early Coinbase employees, but also high-profile venture capitalists like Peter Thiel.

However, it remains unclear exactly how Polymarket plans to make money. According to Tomaino, the site’s revenue is currently “very low,” even though it covers overhead costs like a New York City office and 25 to 30 employees.

Polymarket’s biggest challenge may be convincing regulators to allow it to operate in the U.S.In 2010, the U.S. Commodity Futures Trading Commission banned derivatives, or so-called event contracts, involving terrorism and other illegal activities, including “gambling,” under the Dodd-Frank Act. Although the CFTC did not define gambling at the time, the commission fined Polymarket $1.2 million in 2021 for operating in the U.S. and is currently working on new regulations to explicitly ban election betting.

Investor Tomaino is unfazed by all this. He believes it is misguided to worry that election betting will undermine the political process, noting that such bets have provided insight for more than a century, while super PACs, which allow anonymous donors to spend millions of dollars on behalf of candidates, appear to pose a greater threat to the integrity of elections. As for Coplan, Tomaino said he may become more visible in the coming months. But for now he is "just single-mindedly focused on the product."