Polymarket Founder Shayne Coplan Hints That Insider Trading is Cool & Sportsbooks are a Scam

Polymarket founder Shayne Coplan appeared to promote insider trading as a way to validate markets, while also declaring sportsbooks as a scam that rips off their customers.

In an interview with Axios business editor Dan Primack on Tuesday at the Axios BFD Summit in New York City, Coplan talked on a range of topics.

Primack questioned whether Polymarket sufficiently guards against insider trading, and rather than explaining the ways the company tries to prevent it, Coplan said it is effectively allowed, and perhaps even encouraged, as a way to show market validity.

Primack noted that Google CEO Sundar Pichai retweeted a market on when Gemini 3 was going to be released and asked Coplan to explain what Polymarket does from an integrity perspective to prevent insider trading.

Coplan said, “Nobody is under the impression that nobody knows the answer, right? Like, of course, there’s people who are working on it that know when it’s going to come. And I think what’s cool about Polymarket is that it creates this financial incentive for people to go and divulge the information to the market and the market to change, and all of a sudden it’s trading at 95 cents.”

There have been accusations that some markets, including those on air strikes in Israel, have been the subject of insider trading at Polymarket.

Users Should Expect Insider Trading on Small Markets

Coplan added that he felt users should be aware that small markets are susceptible to insider trading. He stated that in markets “where someone probably knows the answer, people are providing much thinner liquidity, it’s wider spreads, and nobody is confused when participating in a market that at some point in time someone may come in (with insider knowledge).”

Coinbase’s CEO Brian Armstrong exposed how mention markets can be easily manipulated. At the end of the company’s earnings call earlier this month, Armstrong recited several words in the Polymarket and Kalshi markets about what he would say during the call.

These kinds of incidents could occur with increasing frequency as Polymarket goes live in the US. Even that has a market on Polymarket. Coplan was asked whether users should trade on it happening by the end of the year. He declined to comment, but hinted that a full relaunch is coming soon.

Will Polymarket Allow Insider Trading on Sports?

Amid the recent betting scandals in the NBA and MLB, Primack went on to ask if the company would change its stance towards insider trading when it returns to the US, particularly in sports markets. He asked if Polymarket has the same level of integrity monitoring checks as DraftKings, FanDuel, and other sportsbooks.

Coplan said they have “some stuff in the works that will be a great improvement on what’s existing.” He added, “Look, integrity around the game, around the markets is critically important. There are certain regulatory reporting requirements that you have to abide by.” Coplan said the company will abide by those rules.

Traditional against-the-house sportsbooks are motivated to report suspicious betting activity, which leads to bettors profiting and companies losing money. Caesars Sportsbook flagged suspicious bets on the day that Rozier exited a game early when playing for the Charlotte Hornets. The UFC was already aware of suspicious bets against Isaac Dulgarian before his fight with Yadier Del Valle and called the FBI immediately after the fight.

The UFC has also partnered with Polymarket. However, the company and other peer-to-peer platforms may be less inclined to report a flurry of activity on a market.

In fact, prediction market platforms have an incentive to facilitate as much trading as possible, as they generate money by taking a commission on trades. Coplan criticized sportsbooks for limiting users and determining who is eligible to bet on specific markets. For Polymarket, regardless of how the market settles, they will take the same cut, unlike sportsbooks.

While the UFC and NHL have partnered with Polymarket, the American Gaming Association (AGA) has urged other leagues not to endorse the platforms. It argues that there is insufficient regulation through the Commodity Futures Trading Commission (CFTC). The NBA and MLB both sent letters to the CFTC earlier this year expressing concerns about the risk the markets pose to the leagues’ integrity.

Sportsbooks are a Scam, Says Coplan

Part of Coplan’s point was that users would be able to spot any insider knowledge by monitoring the market moves themselves. Users can see the trading volume and price movements with greater transparency compared to against-the-house platforms, which keep most of the data behind the scenes.

Coplan accused sports betting companies of using this data against users. Of major sportsbooks, he said, “They all rip off the consumer, respectfully. You can only trade against the house. They can ban you if you make money, and they can profile you as a user and change the prices based on you. That’s a scam. In traditional finance, that’s like a bucket shop. It’s a scam. Those are illegal.”

Sportsbooks and DFS operators are recognizing the benefit of prediction markets. DraftKings, FanDuel, Underdog, and PrizePicks have all partnered with exchanges licensed by the CFTC.

PrizePicks originally announced a partnership with Polymarket to offer its market through the app, although it has since gone live with Kalshi. FanDuel is set to go live through its partnership with CME at the start of December, while DraftKings will launch DraftKings Predictions by the end of the year after acquiring Railbird.

Coplan accused sports betting of being a duopoly, with FanDuel and DraftKings dominating the market, and stated that the companies lack innovation. They have been adapting their models to compete with Polymarket and Kalshi, however.

In preparation for launching their prediction market apps, both companies left the AGA and abandoned Nevada due to regulatory oversight. As they compete for liquidity, how concerned will companies be about the integrity of markets?