Prediction market Polymarket reportedly recruiting internal market-making team—operating the casino and acting as the house?

Prediction market leader Polymarket is reportedly building an internal market-making team, potentially taking positions directly against users on its platform. The original intent of this strategy is to improve liquidity, but it steps into the same legal and trust controversies that competitor Kalshi is currently facing, including conflicts of interest and neutrality issues such as odds manipulation. At the same time, the entry of whales and professional institutional market makers is reshaping the power balance in prediction markets.

Polymarket recruits internal market makers, betting against users?

According to a Bloomberg report, Polymarket is actively recruiting members with professional trading experience to form an “internal market-making team,” which will be able to directly place orders on the platform, take on unpopular or higher-risk positions in the market, and fill liquidity gaps to stabilize market depth.

This move brings the prediction market platform closer to a traditional casino-style bookie model, rather than just serving as a matching intermediary, and has drawn significant attention.

In 2022, Polymarket was fined $1.4 million for violations and forced to exit the US market. Now, after regaining regulatory approval, it has been cleared to return.

(Polymarket approved by US CFTC, returns to US market as an intermediary-compliant exchange)

Lesson learned: Kalshi’s internal market making faces class action and conflict of interest concerns arise

Just last week, Kalshi’s market-making arm, Kalshi Trading, was hit with multiple lawsuits. The company claimed the purpose was to increase liquidity and improve user experience.

Reportedly, the class action accuses the company of manipulating market odds and putting users in informationally disadvantaged positions against professional institutional counterparties. Critics argue this model has deviated from being a neutral matching platform and now resembles an unlicensed sportsbook.

Although Kalshi co-founder Luana Lopes Lara rebutted these claims as smears and emphasized that internal market makers do not profit or receive special treatment, the controversy has not subsided.

(Kalshi accused of running an illegal gambling platform, acting as bookie against retail traders: Is compliance becoming a business stumbling block?)

Polymarket neutrality challenged: Can whales and market makers absorb liquidity?

Polymarket’s market has grown rapidly, but it is reportedly highly dependent on whales and external market makers for liquidity.

Community sources have revealed that large market makers such as Wintermute and Jump Trading have wallets with significant overlap with the platform, raising concerns that a small number of players could shape the overall market dynamics.

However, with more institutions entering, Polymarket—which once promoted itself as a “crowd wisdom” and “truth discovery engine”—now faces new doubts: is the platform still a neutral information market, or is it gradually evolving into another bookie calculating odds?

(Gambling or truth? Polymarket prediction market accused of manipulation as “UMA whale” sparks crisis of trust)

The next dividing line for prediction markets: financial instrument or gambling platform?

With Polymarket and Kalshi both obtaining regulatory approval in the US, prediction markets are entering the mainstream rapidly. However, the roles of market makers, platform intervention in price formation, and whether certain traders have information advantages are all issues challenging the core claim of collective intelligence.

For example, it was recently reported that an insider at Google repeatedly used inside information to place bets on Polymarket, winning 22 out of 23 times and earning $1 million in a single day.

Looking back, while platforms argue that market makers ensure liquidity and smoother trading, if this goes awry, it could again slip into regulatory gray areas and erode user trust in their authenticity.

This article Prediction market Polymarket reportedly recruiting internal market-making team, becoming both casino and bookie? first appeared on ChainNews ABMedia.