Polymarket Faces Backlash Over Venezuela Market Ruling

Customers of Polymarket have accused the prediction market of arbitrary decision-making after it declined to settle bets tied to whether the US would invade Venezuela. This is despite a US military operation that resulted in the capture of Venezuelan President Nicolás Maduro and First Lady Cilia Flores. 

Over the weekend, users posted angry reactions on Polymarket's website, arguing that the events met any reasonable definition of an invasion. They accuse the platform of redefining terms to avoid paying out.

The dispute followed reports that US forces entered Venezuela, detained Maduro and Flores, transported them to the US, and that Washington would assume control of the country. US President Donald Trump stated that the US would "run" Venezuela, language that bettors cited as further evidence that the market conditions had been met. 

Polymarket rejected those interpretations, stating that the market referred specifically to US military operations intended to establish control and that a limited mission to capture Maduro did not qualify. The company said Trump's remarks, made while referencing ongoing talks with the Venezuelan government, fell short of meeting the threshold defined in the contract.

The decision received even more media attention due to the controversy surrounding insider trading, following a Polymarket user's gain of over $400,000 from the timing of Maduro’s arrest. Additionally, the specific contract on whether US forces would be in Venezuela before January 31 had generated $10.5 million in wagers, showing its popularity. Users argued that, since the event was unique to Polymarket, it would ultimately undermine the platform's credibility. 

“Polymarket has descended into sheer arbitrariness,” a Polymarket user named Skinner had said. “Words are redefined at will, detached from any recognized meaning, and facts simply ignored. That a military incursion, the kidnapping of a head of state, and the takeover of a country are not classified as an invasion is plainly absurd.”

Ex-New Jersey Governor says no to prediction markets

As authorities exert more pressure on prediction market apps, the controversy surrounding Polymarket intensifies. Former New Jersey Governor Chris Christie expressed concern that the rapid proliferation of sports-related prediction markets may pose legal, economic, and moral difficulties, as most sites were flouting traditional gambling laws.

Speaking on CNBC with anchor Contessa Brewer, Christie said these markets often bypassed state-regulated sports betting systems that were designed to protect consumers and preserve the integrity of competitions. He said uneven enforcement across states had allowed prediction markets to grow in jurisdictions with limited oversight or explicit prohibitions, reducing tax revenue and exposing bettors to unregulated products.

Christie recently joined the American Gaming Association as a strategic advisor and said the central issue was legality. He argued that sports-related prediction markets violated existing state laws and should not be permitted to continue operating. 

He rejected claims by companies such as Kalshi that oversight by the Commodity Futures Trading Commission exempted them from state gambling regulations, saying federal derivatives oversight was never intended to cover wagers on sporting outcomes