Building a Polymarket Clone, good or bad idea?

I was at an investor/founder event the other day and ran into a dude who was trying really hard to sell me on launching a prediction market, kind of a clone of Polymarket.

He said it's like the craziest business model in right now. He said the house always wins on fees, and the regulations aren't really there because prediction markets are not considered gambling houses.

I'm a senior dev with a friend who's really good at backend/smart contracts, and we were thinking about building it from the ground up to save money, which could cost upwards of $300k+ for dev firms.

I had a few questions that I hoped someone here might have experience in and could answer:

Regulation: This dude claimed you don't need licenses if you don't handle any fiat and just work with USDC.

Liquidity: How do you guys deal with this? Do you usually hire market-making firms or do you just write bots for yourself and put out false or early liquidity?


We're good at building the engine, the order book, and the UI. But before we waste valuable time of our lives building this, I wanted to know if we would eventually face issues with the law, or if it really is just a dream scenario he claimed it would be.

Anyone have any experience, I would love to hear.

Thanks for the input.

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I like the idea, but I would have some legal eagle check to make sure you were not violating some laws there.

500.00 to an attorney/solicitor is a lot less expensive than what could come from a government agency.

While it sounds great on paper, check out some of the latest prediction market launches and the subsequent probes. Then you also run into banking issues and then security costs.

I wouldn’t do MM in house Immediatedly. And I would specifically look up the account of Investments Lawyer on Twitter, he posts some interesting scenarios/cases/filings he sees regarding the operation of prediction market cos (especially the big ones) and latest info on the laws regarding how you’re allowed to promote.

No idea BUT I read the story about kalshi and they had big headaches with all the legal stuff. I dont think its that easy

wolfofdevstreet said:

you don't need licenses if you don't handle any fiat and just work with USDC

Click to expand...

Sorry but wrong. You accept payments, you send payments => you need money transmitting license. Especially in USA. Of course you won't get noticed by authorities for some time. But I can tell you that many crypto exchange owners got jail time in USA for NOT having this license, even though they didn't work with fiat too.

wolfofdevstreet said:

if it really is just a dream scenario he claimed it would be

Click to expand...

Development is 5% work here, pushing this to the market is 80%. In order to make a casino work, you gotta get a full house of people, any ideas how to do this?

I get asked this question at least once every few months by clients and potential clients and have about 6 pretty exhaustive RFQs in my email right now.

Disclosure - In 2025, I had a pretty complex bot trading 15m markets. The bot did well for about 50 days, then some changes were announced and I lost the edge. A few months later, I lost about 50% of what I made through the bot in a single market that I (and many others believe) was just wrongly by their stupid oracle.

Anyways, not to digress and please don't take this as me discouraging you.

I have researched this in a pretty thorough manner and I'll try and copy paste from my client emails without revealing too much. Some as recent as last week.

//

First things first, your friend was "overselling". Or they have no idea about Polymarket and their 2022 troubles.

There is a reason why Polymarket is walled for US citizens and that they have to use VPNs to get in their account.

For one, while true that CFTC (Commodities Future Trading Commission) doesn't consider prediction markets as gambling houses. However, here is the second part of that sentence - according to the same CFTC - prediction markets are derivative markets. And every single market is an "event contract".

This means that every rule applicable to derivative market applies to prediction markets and this includes the mega "insider trading law" and the fact that they have to be registered as a designated market.

Source - https://www.financemagnates.com/fin...-not-gambling-and-insider-trading-laws-apply/

Since you used Polymarket as the base example, Polymarket got in trouble for not being a "Designated Contract Market".

As part of the settlement, Polymarket paid $1.4 million and ceased operations in US (and unregulated markets in general)

https://www.blockchainandthelaw.com...inary-options-operator-using-smart-contracts/

Now comign to your questions. The supposed "No oversight if we use USDC only".

Well last month the SEC and the CFTC issued a joint statement, specifically to address this crypto only loophole

https://www.ballardspahr.com/insigh...hen-digital-assets-are-and-are-not-securities

Rules are being made as I write this email and by the time your product hits the market, you will potentially have a ton to lose

https://www.freshfields.com/en/our-...insider-trading-on-prediction-markets-102mp8l

You have CFTC/SEC in the US, MiCA ( Markets in Crypto-Assets) in the EU and many other emerging regulations around the world.

I am from India, so I can also share another tidbit. .

India used to have Probo.in - it was a Prediction Market in it's most raw, most nuanced form. No blockchain, no smart contracts. You deposited INR and instantly had your wallet reflect the payment. You made your trades. Like Polymarket rounds to a dollar. Probo ran trades around INR 10. If you won you withdrew and it used India's UPI system to have the balance in your account in about 3 seconds.

It was pretty popular, had pretty much all the features of Polymarket. Had tons of markets. A running BTC, ETH hourly market.

Then the Indian government introduced, PROGA aka Promotion and Regulation of Online Gaming Act, 2025

This wasn't done to target Probo specifically, this was done because a ton of fantasy leagues had started popping up and Indians were getting addicted.

Now the Probo website reads - In light of PROGA, Probo is closed for business.

The point is, the issues keep mounting up until the regulators have to step in. And when they do, they almost always over reach.

Just this month, a US Soldier was in the news for making about $400k on the Venezuelan invasion. It was through and through insider trading, as he was involved in the execution.

https://www.cnbc.com/2026/04/23/doj-soldier-polymarket-bets-venezuela-maduro.html

//

Anyways, back to the topic.

All of the above was the regulatory end of things. Now let's move to the operations bit.

First things first, yes there are market maker firms like GSR & Wintermute that can help with initial liquidity. But they're by no means cheap, they have upfront fees and they also have ironclad deals that could leave you with a fee share in perpetuity (even when you don't need them anymore).

Second is the more obvious one that you've mentioned. Using bots to boost initial liquidity. There is a term for this - "Wash trading". It is proper market manipulation by any meaning of the word and (if am not wrong) a felony in most regulated markets.

Finally, there are real actual operational challenges to deal with. A decent liquidity incentive program like Polymarket offers via Clob - https://docs.polymarket.com/market-makers/liquidity-rewards

Or you need an Automated Market maker (Augur/Gnosis styled).

You also need to ensure your order book (CLOB styled) or your AMM is secured against arbitrage bots.

//

All of this is still very cursory and is mostly me jumping between my Gmail app and BHW. (You caught me while travelling on a Saturday evening)

It's definitely possible to build a prediction market. But Polymarket has succeeded because of the First movers advantage. Everyone knows most of its userbase is from the US. Even the regulators do. So they exist in a legally grey area right now. A situation that can change overnight.

Polymarket is also banned in France, Switzerland, Poland, Singapore, Romania, Portugal, Bulgaria and Australia (all of this is on their Wikipedia page)

Hope that helps in someway.

P.S - Written on my phone while in the back of a moving car. Please excuse typos and brevity.

NomixGuy said:

Sorry but wrong. You accept payments, you send payments => you need money transmitting license. Especially in USA. Of course you won't get noticed by authorities for some time. But I can tell you that many crypto exchange owners got jail time in USA for NOT having this license, even though they didn't work with fiat too.


Development is 5% work here, pushing this to the market is 80%. In order to make a casino work, you gotta get a full house of people, any ideas how to do this?

Click to expand...

I really don't know much about prediction markets as you can tell, but i do run blackhat google ads for online casinos, so getting poeple in the door is no problem, what im REALLY scared of though is the legal side of things. And it seems the guy telling me about this, kind of made it sound easier than it is.

My best advice will be you can start something like that but what is your edge against more established platforms? You need an advantage to propulsate that idea. About the legal aspect you may face issues as well but you should move to a lot less stricter country where you can make this type of site

BlogPro said:

I get asked this question at least once every few months by clients and potential clients and have about 6 pretty exhaustive RFQs in my email right now.

Disclosure - In 2025, I had a pretty complex bot trading 15m markets. The bot did well for about 50 days, then some changes were announced and I lost the edge. A few months later, I lost about 50% of what I made through the bot in a single market that I (and many others believe) was just wrongly by their stupid oracle.

Anyways, not to digress and please don't take this as me discouraging you.

I have researched this in a pretty thorough manner and I'll try and copy paste from my client emails without revealing too much. Some as recent as last week.

//

First things first, your friend was "overselling". Or they have no idea about Polymarket and their 2022 troubles.

There is a reason why Polymarket is walled for US citizens and that they have to use VPNs to get in their account.

For one, while true that CFTC (Commodities Future Trading Commission) doesn't consider prediction markets as gambling houses. However, here is the second part of that sentence - according to the same CFTC - prediction markets are derivative markets. And every single market is an "event contract".

This means that every rule applicable to derivative market applies to prediction markets and this includes the mega "insider trading law" and the fact that they have to be registered as a designated market.

Source - https://www.financemagnates.com/fin...-not-gambling-and-insider-trading-laws-apply/

Since you used Polymarket as the base example, Polymarket got in trouble for not being a "Designated Contract Market".

As part of the settlement, Polymarket paid $1.4 million and ceased operations in US (and unregulated markets in general)

https://www.blockchainandthelaw.com...inary-options-operator-using-smart-contracts/

Now comign to your questions. The supposed "No oversight if we use USDC only".

Well last month the SEC and the CFTC issued a joint statement, specifically to address this crypto only loophole

https://www.ballardspahr.com/insigh...hen-digital-assets-are-and-are-not-securities

Rules are being made as I write this email and by the time your product hits the market, you will potentially have a ton to lose

https://www.freshfields.com/en/our-...insider-trading-on-prediction-markets-102mp8l

You have CFTC/SEC in the US, MiCA ( Markets in Crypto-Assets) in the EU and many other emerging regulations around the world.

I am from India, so I can also share another tidbit. .

India used to have Probo.in - it was a Prediction Market in it's most raw, most nuanced form. No blockchain, no smart contracts. You deposited INR and instantly had your wallet reflect the payment. You made your trades. Like Polymarket rounds to a dollar. Probo ran trades around INR 10. If you won you withdrew and it used India's UPI system to have the balance in your account in about 3 seconds.

It was pretty popular, had pretty much all the features of Polymarket. Had tons of markets. A running BTC, ETH hourly market.

Then the Indian government introduced, PROGA aka Promotion and Regulation of Online Gaming Act, 2025

This wasn't done to target Probo specifically, this was done because a ton of fantasy leagues had started popping up and Indians were getting addicted.

Now the Probo website reads - In light of PROGA, Probo is closed for business.

The point is, the issues keep mounting up until the regulators have to step in. And when they do, they almost always over reach.

Just this month, a US Soldier was in the news for making about $400k on the Venezuelan invasion. It was through and through insider trading, as he was involved in the execution.

https://www.cnbc.com/2026/04/23/doj-soldier-polymarket-bets-venezuela-maduro.html

//

Anyways, back to the topic.

All of the above was the regulatory end of things. Now let's move to the operations bit.

First things first, yes there are market maker firms like GSR & Wintermute that can help with initial liquidity. But they're by no means cheap, they have upfront fees and they also have ironclad deals that could leave you with a fee share in perpetuity (even when you don't need them anymore).

Second is the more obvious one that you've mentioned. Using bots to boost initial liquidity. There is a term for this - "Wash trading". It is proper market manipulation by any meaning of the word and (if am not wrong) a felony in most regulated markets.

Finally, there are real actual operational challenges to deal with. A decent liquidity incentive program like Polymarket offers via Clob - https://docs.polymarket.com/market-makers/liquidity-rewards

Or you need an Automated Market maker (Augur/Gnosis styled).

You also need to ensure your order book (CLOB styled) or your AMM is secured against arbitrage bots.

//

All of this is still very cursory and is mostly me jumping between my Gmail app and BHW. (You caught me while travelling on a Saturday evening)

It's definitely possible to build a prediction market. But Polymarket has succeeded because of the First movers advantage. Everyone knows most of its userbase is from the US. Even the regulators do. So they exist in a legally grey area right now. A situation that can change overnight.

Polymarket is also banned in France, Switzerland, Poland, Singapore, Romania, Portugal, Bulgaria and Australia (all of this is on their Wikipedia page)

Hope that helps in someway.

P.S - Written on my phone while in the back of a moving car. Please excuse typos and brevity.

Click to expand...

I mean WOW, first of all the fact that you took the time of day to write all of this and link the sources, truly appreciated and i wish you safe travels!


An absolute wake up call, i will continue doing research on the legal side of things and see if i can maybe do it outside of america as i don't even live there, but for now i will calm down and see what happens in the coming months.


Again, thank you so much for taking the time of day to help!

That sounds interesting—but how many users will drop off because they can't make predictions using fiat currency?

I'm not sure, but I remember reading about Kalshi's journey and they ran into a lot of regulatory and legal challenges. It definitely doesn't seem as straightforward as it looks.

are you still developing this?

Hairam fl said:

are you still developing this?

Click to expand...

still doing research on if i should or not