Allium's research indicates that US traders disproportionately favour geopolitical events over traditional elections. Their substantial financial interest lies in markets concerning foreign conflicts and novelties, which are generally unavailable on regulated US trading platforms. This data underscores a persistent offshore trading trend among American users.
Polymarket, a decentralised prediction market, attempts to block US users via IP address restrictions. However, Allium's report suggests these measures are largely ineffective. The platform's reliance on cryptocurrency rails, stablecoins, and direct wallet-to-wallet transactions means there are no conventional financial intermediaries like banks or brokers for regulators to intercede with. Consequently, a Virtual Private Network (VPN) combined with an existing crypto wallet is often sufficient to circumvent the geographic restrictions.
Allium's methodology for identifying country affiliations relies on on-chain wallet behaviour rather than IP addresses. This precision allows them to detect US-linked activity even when VPNs are employed to mask location. The firm acknowledges that while only about 6% of Polymarket's political-market wallets can be definitively linked to a country, these figures should be interpreted as directional indicators rather than exact counts.
An interesting aspect of this trading activity is the nature of the bets placed by US traders. Geopolitics constituted 46% of their notional value, compared to 36% for the platform as a whole. Conversely, elections accounted for only 16% of US wallet activity, in stark contrast to 32% platform-wide. This suggests that American users are almost three times more likely to bet on foreign conflicts than on electoral outcomes, a preference not observed among other international users.
Among the twelve largest markets engaged in by the US cohort, five involved bets on potential conflicts, including the Iran war. The single most substantial US bet, valued at £16.4 million ($20.8 million), was placed on a novelty market concerning whether Ukrainian President Volodymyr Zelenskyy would wear a suit. This specific focus on non-traditional and high-risk events by US traders presents a policy dilemma for regulators: whether to integrate such markets into domestic oversight or maintain their exclusion, thereby risking continued offshore participation and potential regulatory arbitrage.
