Polymarket Introduces Deposit Limits and Self-Exclusion
As calls for regulation of prediction markets intensify, Polymarket has launched voluntary deposit limits, self-exclusion, and mental health referrals. The tools are designed according to the common gambling industry principle of "tightening takes immediate effect, loosening requires a cooling-off period."
U.S. users can set daily, weekly, or monthly deposit limits across all funding channels. Reductions take immediate effect, while increases or cancellations require a mandatory cooling-off period. Traders can remove themselves from the platform for 30 days, one year, or permanently. Malea Otranto, Global Trust and Safety Lead, stated that this is a floor, not a ceiling, and the company will track usage and adjust based on effectiveness.
The platform has partnered with Birches Health to provide mental health resources for users exhibiting compulsive financial trading behaviors. The agency offers remote assessments, personalized plans, and ongoing treatment in all 50 states, with access integrated into the product and customer service pathways, along with a four-question self-assessment guide. The press release did not specify who would bear the costs. The company also launched a Trust and Safety Center, summarizing user protections, market integrity, and community rules, covering comments, chats, teams, homepages, and Discord.
Prediction markets in the U.S. are classified as financial markets regulated by the Commodity Futures Trading Commission (CFTC), and do not automatically apply state consumer protections, tax burdens, and mandatory gambling addiction clauses for sports betting. TickerTracker data shows that this month, sports markets and parlays accounted for over 98% of Polymarket's trading volume in the U.S. New York State has sued QCX, which operates Polymarket US, alleging unlicensed operations and acceptance of users aged 18 to 20, seeking to shut it down, recover earnings, impose triple penalties, and a maximum of $100,000 per unauthorized sports bet. The company denies wrongdoing and has counter-sued in the Southern District Federal Court, claiming that the Commodity Exchange Act has exclusive jurisdiction over designated contract markets.
The U.S. version is set to launch in December 2025 through the acquisition of the licensed entity QCX, which received designated contract market status on July 9, 2025, and will self-certify financial, election, and sports event contracts starting September 30, 2025. Chief Legal Officer Neal Kumar stated that the company has over 350 employees in New York and will continue operations. The state emphasizes that licensed sports betting must pay taxes to the education fund, with projected mobile sports betting wagers in New York for the 2025-2026 fiscal year at approximately $26.16 billion, and operator gross revenue around $2.6 billion, contributing about $1.33 billion to education.
Funds remain in the event contract accounts, and limits only restrict the speed of new deposits, not constituting a loss limit or position limit. Buyers are users who wish to continue engaging in sports and parlays under the CFTC framework, while sellers are licensed bookmakers required by state attorneys general to pay taxes under gambling licenses. The events are driven by compliance demonstrations following the lawsuits. Beneficiaries are prediction platforms that can utilize federal preemption against state laws, while pressured parties are state regulators circumvented by tax and mandatory gambling addiction systems, as well as the narrative that 98% of transactions are treated as financial markets. The international site also launched up to 20x perpetual contracts in licensed regions this month, which are not included in U.S. designated market rules.
Source: Public Information
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After being identified as an unregistered exchange by the CFTC in 2022, Polymarket's main site became read-only for the U.S.; acquiring QCX by the end of 2025 allows U.S. traffic to enter the designated contract market. Kalshi is following the same federal licensing path and has clashed with states like New York and Minnesota, with the Third Circuit Court supporting federal law precedence in the Kalshi case. Malea Otranto framed self-exclusion and cooling-off periods as a "floor," with the timing falling six days after New York's lawsuit, and the tool list almost directly corresponds to state gambling laws regarding limits, exclusion lists, and addiction referrals, but is presented as voluntary rather than mandatory.
Capital has not exited sports contracts but is using protective tools to package federal jurisdiction. The transaction structure has shifted from elections to sports: from May to July, combined monthly transactions for Kalshi and Polymarket rose from about $26 billion to approximately $53 billion, with the World Cup window seeing Kalshi sports around $58 billion and Polymarket about $22 billion, while U.S. licensed sports betting wagers in the same period were about $40 billion. Money is redirected from state-licensed bookmakers' cuts and education taxes into event contract fees. The platform claims not to take opposing positions and charges fixed fees per transaction, with losses not providing additional profits to the company; states, however, view uncertain outcomes as gambling. Resource investments are focused on the Trust Center and remote healthcare access, rather than first applying for a New York gambling license.
In contrast to DraftKings and FanDuel, which must pay state taxes, restrict under-21s, and adhere to mandatory self-exclusion lists, and with the CFTC issuing a market emergency status to block state laws from applying to Kalshi. Prediction markets are in an expansion phase defined by federal financial markets covering sports behavior, with control mechanisms being preemptive litigation and voluntary tools, rather than accepting state tax forms. Whoever wins the preemption decides whether this 98% of sports transactions are classified as futures or gambling.
The essence is regulatory change. The same parlay behavior, when placed under commodity law, is an event contract, while under state law, it is an unlicensed sports bet. The mechanism is: federal licensing allows the platform to operate across state lines without paying the 51% education cut, and when state budgets face shortfalls, they retaliate using consumer protection clauses; the platform then uses gambling industry-style limits to prove it has fulfilled its protective obligations, arguing that mandatory regulation is a product feature. The addiction tools change the deposit rhythm but do not alter the nature of the contracts or the tax attribution.
ABAB News · Cognitive Law
Voluntary limits are to block mandatory licensing
If transactions resemble gambling, protective tools will also resemble gambling
If federal definitions win, state taxes will disappear from the books