JPMorgan Chase terminated its direct banking relationship with prediction-market operator Polymarket in October 2025 over regulatory concerns, according to a person familiar with the matter, highlighting the growing compliance risks banks face as event-based trading platforms expand into mainstream finance.
The decision, first reported by the Financial Times and confirmed by Reuters, did not amount to a complete break between the two companies. Polymarket said it continues to maintain relationships with multiple JPMorgan entities, including operational integrations and arrangements involving customer fund flows.
“We maintain a close, active relationship with JPMorgan across multiple entities, operational integrations, and material handling of customer fund flows,” a Polymarket spokesperson said.
“The strength of our relationship is highlighted by our CEO speaking at three of their flagship events in the past year alone. Any suggestion otherwise fundamentally mischaracterizes our relationship,” the spokesperson added.
JPMorgan’s decision concerned its banking relationship with Polymarket, rather than an across-the-board termination of all commercial dealings. Reports indicate that Polymarket subsequently found another banking partner, although the identity of that institution has not been disclosed. JPMorgan has also continued other interactions with the company.
The development comes as prediction markets have expanded rapidly since the 2024 U.S. presidential election, attracting users interested in trading contracts tied to elections, sports, economic indicators and other real-world events.
The growth has placed the industry at the intersection of financial markets, gambling, and cryptocurrency, creating a difficult regulatory environment for both the platforms and financial institutions that provide them with banking services.
Why Banks Are Becoming Cautious
Prediction markets allow users to buy and sell contracts whose value is linked to the outcome of an event. Supporters believe that the resulting prices can provide a real-time measure of collective expectations and market sentiment.
The regulatory question is whether some of these contracts amount to financial derivatives or unlawful gambling products.
Polymarket has already faced significant regulatory action. In 2022, the Commodity Futures Trading Commission ordered the company to pay a $1.4 million penalty and cease offering unregistered event-based binary options contracts to U.S. customers.
The company has since taken steps to establish a regulated U.S. presence, but prediction markets remain under scrutiny from regulators and lawmakers at both the federal and state levels.
That uncertainty creates a particular problem for banks.
Financial institutions must assess not only whether a customer has obtained a particular regulatory authorization but also the broader legal and compliance risks associated with processing its funds. A prediction-market platform can therefore become a difficult banking customer even while pursuing regulatory approval for its underlying business.
JPMorgan’s decision illustrates that distinction. Regulatory uncertainty can affect a company’s access to financial infrastructure independently of whether regulators ultimately allow it to operate.
Prediction Markets Face Growing Political and Legal Scrutiny
The banking decision comes as the prediction-market industry faces a wider regulatory challenge.
New York City Council Speaker Julie Menin this week accused major prediction-market companies of using predatory marketing practices that could exploit younger traders.
Separately, New York Attorney General Letitia James sued Polymarket rival Kalshi last month, alleging that its prediction-market operations violate state gambling laws.
The legal battles are significant because prediction-market operators are seeking to establish themselves as legitimate financial-market businesses rather than online gambling companies.
The distinction carries major consequences.
Analysts have noted that if the platforms are treated primarily as financial markets, they can potentially operate within the regulatory framework governing derivatives and exchanges. But if state authorities classify particular contracts as gambling, operators could face a different set of restrictions, licensing requirements and enforcement actions.
That uncertainty is particularly relevant to banks, which have extensive regulatory obligations of their own.
Polymarket’s continued expansion has made the relationship with established financial institutions increasingly important. The company has attracted significant investor interest as prediction markets have grown into a major new category of financial activity. At the same time, its business model remains exposed to regulatory disputes over which types of event contracts can legally be offered and to whom.
For JPMorgan, maintaining selected commercial ties while ending the direct banking relationship suggests a more nuanced approach than simply abandoning the company. The bank can continue engaging with Polymarket in areas where it is comfortable with the regulatory exposure while limiting direct involvement in banking services that may carry greater compliance risk.
However, Polymarket finding alternative banking arrangements demonstrates that access to financial infrastructure has become an important consideration as the company scales.
Prediction markets are increasingly being promoted as sources of information about market expectations, but the same characteristics that make them attractive to traders are creating concerns about gambling, market manipulation, insider information and consumer protection.
Those concerns are expected to become more significant as platforms expand beyond political events into sports, financial markets and other areas where large amounts of money can be wagered.
For now, the JPMorgan-Polymarket relationship illustrates the uneasy middle ground occupied by the industry. Prediction markets are attracting major investors, financial institutions and millions of users, yet banks remain sensitive to unresolved regulatory questions surrounding their business models.
The fact that JPMorgan ended one banking relationship with Polymarket while maintaining other commercial connections shows that Wall Street’s response is not necessarily a simple rejection of prediction markets. Instead, banks appear to be separating individual services and assessing the regulatory risk attached to each part of the relationship.
