Key highlights:
- JPMorgan wants to underwrite Polymarket’s IPO after severing banking ties with the platform
- JPMorgan has kept a warm relationship despite the debanking incident, inviting Polymarket's executives to its events
- An IPO is not yet confirmed, but sources say Polymarket is close to raising $1 billion at a $20 billion valuation
US finance giant JPMorgan Chase is reportedly eyeing an underwriting role if Polymarket decides to go public, despite cutting off banking ties with the prediction marketplace platform. While an initial public offering (IPO) is far off, Polymarket has to navigate through a gale of regulatory headwinds to reach the milestone.
JPMorgan Jostles to Underwrite Polymarket IPO
Several sources with knowledge of the matter have disclosed that JPMorgan is angling for an underwriting role for Polymarket’s tentative IPO event. The move comes months after JPMorgan debanked Polymarket, urging the platform to find new banking partners over a streak of regulatory concerns.
Despite terminating its banking business with Polymarket, the relationship between the two entities did not come to an end. According to a Polymarket spokesperson, the company maintains a close and active relationship with JPMorgan across multiple entities, operational integrations, and customer fund flows.
Meanwhile, JPMorgan has continued to engage with Polymarket executives. For instance, Polymarket CEO Shayne Coplan has appeared at events put together by JPMorgan’s investment banking arm as Wall Street eyes a portion of IPO fees.
While an IPO is far off for Polymarket at the moment, JPMorgan could rake in a fortune if it serves as an underwriter in the transactions. Typically, underwriters charge anywhere between 1% and 7% depending on the size of the IPO, with Goldman Sachs netting $100 million from underwriting the SpaceX IPO.
Meanwhile, Polymarket is reportedly seeking to raise more than $1 billion at a valuation of over $20 billion. Its rival, Kalshi, is also pushing for a $750 million raise at a $40 billion valuation, with several VC firms lining up to invest in both firms.
Prediction markets boom alongside mounting legal troubles
A bird’s-eye view reveals a surge in trading volumes for prediction marketplaces. Combined monthly trading volumes on Kalshi and Polymarket soared to a record-high of over $45 billion in June, buoyed by the buzz around the FIFA World Cup.
Source: Block
Apart from sports, prediction markets are pivoting into elections, cryptocurrency prices, economic indicators, and entertainment, fuelling the sustained boom. At press time, Polymarket’s annualized revenue has already crossed $1 billion with Wall Street firms circling the industry.
Despite the sector's growth, a haze of regulatory uncertainty clouds the long-term growth of prediction markets. Both Polymarket and Kalshi are weathering a raft of legal battles in court, with regulators keen on tightening the sector’s noose, pitting federal and state regulators against each other.
Things came to a head when the US CFTC invoked extraordinary powers to compel Kalshi to maintain its operations in defiance of New York’s push to shut down the platform. Meanwhile, the Czech Republic has geo-restricted Polymarket for operating as an unregistered gambling platform.
