Polymarket founder: “Sportsbooks are a scam”, insider trading not a problem

• Shayne Coplan tells conference audience that insider trading can improve prediction market accuracy.
• Polymarket founder labels traditional sportsbooks a “scam” and criticises consumer treatment and pricing practices.
• Remarks come as prediction markets expand in the US, with traditional sportsbooks launching in this vertical soon.

Polymarket founder Shayne Coplan has ignited debate over prediction market ethics after suggesting insider trading can help his platform reflect “truth”, while calling traditional sportsbooks a scam that mistreats customers.

Coplan made these remarks at the Axios BFD Summit in New York this week. His comments come at a pivotal time as regulated sportsbooks expand their offerings to include prediction markets, and Polymarket plans a US relaunch after past regulatory issues.

Insider trading and ethics

When asked how Polymarket handles insider trading, Coplan said such activity is expected and may be encouraged as it pulls private information into market prices.

“What’s cool about Polymarket is that it creates this financial incentive for people to go and divulge the information to the market and the market to change, and all of a sudden it’s trading at 95 cents.”

This means insider trading on game outcomes or league events moves prices closer to reality, giving users timely market insights.

This stance differs from traditional sports betting regulation, where insider trading or using non-public information is banned to protect fair play and consumer trust. Regulators and leagues worry about the impact of insider trades on investigations and the integrity of sports markets.

Criticism of traditional sportsbooks

Coplan criticised many sportsbooks as unfair to consumers, and described them as “scams” that trade against the player.

“You can only trade against the house. They can go and ban you if you make money. They can kick you off and they can profile you as a user and change the prices based on you. In traditional finance that’s like a bucket shop. That’s like a scam. Those are illegal,” Coplan said.

“You can’t expect to run a business that is that rigged against the consumer in perpetuity in America.”

Unlike sportsbooks, Polymarket takes a commission on trades regardless of outcome and offers transparent data on prices and volumes.

Coplan positioned Polymarket’s peer-to-peer model as more transparent and fair. This setup offers transparency in prices and volumes, appealing to users who prefer decentralised trading on outcomes without a house edge.

US relaunch

Polymarket is preparing for a renewed US launch with enhanced integrity monitoring and compliance with regulatory requirements around sports markets. The company has recently acquired the certified QCEX exchange in July, eliminating the typical three-year approval process required for CFTC certification.

Federal regulators, including the Commodity Futures Trading Commission, have previously sanctioned Polymarket for operating unregistered markets. Sports leagues such as the NBA and MLB have formally highlighted concerns to regulators about prediction markets intersecting with sports integrity frameworks.

Rising competition from sportsbooks

Licensed sportsbooks like DraftKings and FanDuel are moving to include prediction markets within their apps, intensifying competition. Both companies left Nevada over conflicts with the Nevada Gaming Control Board, which warned operators that prediction market bets are incompatible with maintaining a Nevada gaming licence.

Following their departure from Nevada, DraftKings and FanDuel also left the American Gaming Association (AGA) because of fundamental disagreements over their business models. This move signals their growing desire to enter the prediction market space, even at the expense of traditional gaming licenses or lobby interests.

Different business models

Comparing the two, Polymarket uses blockchain-based technology, enabling fully transparent, decentralised trading with users holding funds directly through smart contracts.

Sportsbooks use centralised platforms, fiat currency, and operate within strict regulatory boundaries, offering a variety of bet types, including point spreads and parlays (markets Polymarket focuses less on).

Polymarket’s openness and lower fees appeal to crypto-savvy users looking for peer-driven markets. In contrast, traditional sportsbooks provide familiar user experiences, broader bet types, customer support, and consumer protections.

These include limits on deposits and losses, self-exclusion tools, and proactive monitoring for signs of problem gambling, which are mandated under regulatory regimes to protect consumers.

What comes next?

Coplan’s unapologetic stance on insider trading and sportsbook criticism highlights the ongoing debate around transparency, fairness, and regulatory treatment in the evolving sports betting landscape. The growing legal uncertainty surrounding prediction markets and their classification as sports betting products may soon require Supreme Court intervention.

Coplan anticipates that the Court will ultimately resolve disputes over whether prediction markets fall under federal Commodity Futures Trading Commission (CFTC) oversight or state gambling regulations.

Recent court rulings have been mixed, with some decisions favouring federal jurisdiction while others support states’ rights to regulate. This fragmentation leaves the legality of these markets unclear across the US.

A Supreme Court ruling could decisively shape the regulatory framework, determining if prediction markets can operate nationally under the CFTC or remain subject to individual state laws.