Four Questions About The Polymarket-X Deal
A few minutes after I published the Closing Bell roundup Friday morning, news dropped about the deal between Polymarket and X/Twitter.
If you want to read about the nuts and bolts, I covered it at The Closing Line. The short version: Polymarket is now the official prediction markets platform of the social media platform.
I asked and tried to answer some questions that arise from this new deal:
1. What the hell happened to the Kalshi and xAI deal?
There’s a lot to unpack in all of this news, but maybe the most interesting part is the Kalshi backstory.
Remember two weeks ago, when Kalshi had just announced a deal with Elon Musk’s xAI? That is, until Kalshi CEO Tarek Mansour and Bloomberg had to retract the announcement.
So not only did Kalshi lose the deal with a company in Musk’s orbit, said deal went to another prediction market platform. It’s also a much bigger deal that includes integrations with X itself.
We don’t know what exactly happened with the nixed Kalshi-xAI deal. The following is complete speculation; I am just trying to make sense of the timeline.
It’s hard to believe the Polymarket-X deal came together in the past two weeks, although not impossible. Is it feasible that Kalshi announced the xAI deal, but “big” X had been working on the Polymarket deal in the background and said, “Whoa, hold on there, Kalshi.” Again, I don’t have any intel here, but that would potentially explain a lot of what happened.
There is also the interesting — maybe coincidental — timing of this deal coming out just as Donald Trump and Musk have a falling out. Donald Trump Jr. is on Kalshi’s board; now Musk’s company is backing Polymarket. Also remember former Kalshi general counsel Eliezer Mishory left the company to go to work for the Department of Government Efficiency — when Musk was in charge — back in April.
There’s an interesting story behind this pretty big “L” for Kalshi. We may never hear it publicly, but if you want to tell it to me, you know where to find me.
2. What does this mean for Polymarket in the US moving forward?
So let’s start with a few things:
Polymarket has technically been out of the US since 2022, when it agreed to settle charges with the Commodity Futures Trading Commission for failing to register.
It’s difficult to believe no one is trading on Polymarket in the US right now.
A sizable amount of Twitter’s userbase is American.
After Donald Trump won in November, Polymarket said it plans to re-enter the US at some point.
Add it all up and what do you get? It seems pretty likely that Polymarket will attempt to get back into the US one way or another. Is that under the CFTC as a licensed entity? While that might have been difficult to imagine in the past, it’s less difficult to imagine under the current administration.
Again, the Trump-Musk brouhaha looms. Is a Trump CFTC that also has ties to Kalshi going to bend over backwards to let Polymarket into the US? Maybe CFTC chair nominee Brian Quintenz — a Kalshi board member until he steps down — will want the biggest prediction market around to be under the CFTC’s umbrella no matter what. Or maybe Polymarket finds another way to serve the US.
In any event, it’s hard to believe Polymarket doesn’t have bigger aspirations in the US on the heels of this deal.
3. What about the deal between X and BetMGM?
BetMGM did a deal with X last February to be the official odds provider for the social media platform.
Like Kalshi, Polymarket is very much about sports event trading. The Polymarket deal is probably not stepping on BetMGM’s toes from a partnership standpoint because it’s technically not “sports betting.”
Polymarket’s presence further devalues the proposition for BetMGM. There’s not been much chatter on how the BetMGM-X deal is performing. From the metrics we can see, BetMGM hasn’t gained market share in the US sports betting industry since the deal was signed.
4. So are we going to be able to bet on things on X?
A lot of people seem to be suggesting that you will be able to. I guess I wouldn’t rule that out in the future, but that seems like something that’s not imminent.
The press release doesn’t give us many hints, and you have to squint to find a reason to think X is going to allow trading directly on X. The release mentions “a suite of integrations” as time goes on, so let your imagination run wild, if you want.
The most likely scenario: X will make it easy to get to Polymarket and trade there. If everyone’s betting on X itself, feel free to cold take me.