Polymarket is moving closer to the compliance playbook used by regulated financial platforms, with the prediction market company now reportedly stepping up action against VPN-based access and pushing more users toward identity verification.

The change matters because VPN use has long been a sensitive issue for platforms that restrict access by location. In Polymarket’s case, traders who try to get around geolocation blocks may now face stricter enforcement, including blocked access, account reviews or possible bans. The company is also said to be offering incentives to users who voluntarily complete Know Your Customer, or KYC, checks.

That marks a clear shift in tone. Polymarket built much of its visibility through fast-moving event markets, crypto-native users and global participation. But as prediction markets attract more money and political attention, regulators are asking harder questions about who is trading, where they are trading from and whether platforms can detect suspicious activity before it damages market integrity.

The pressure is no longer limited to one company. Polymarket and rival Kalshi have both drawn scrutiny after high-profile betting markets raised concerns that some users may have been trading with privileged information. For lawmakers, the core issue is not just whether prediction markets are popular, but whether they have enough safeguards to prevent insider trading, identity abuse and restricted users from participating.

The U.S. House Oversight Committee has reportedly asked Polymarket to explain how it verifies domestic and international account holders and what steps it takes to prevent insider trading. Kalshi received a similar request. House Oversight Committee Chairman James Comer has also said lawmakers want to examine whether new legislation is needed for the sector.

At the same time, the legal fight around prediction markets is expanding across the U.S. More than a dozen states are trying to regulate the industry through legislation, while Minnesota has become the first state to pass a law that would ban prediction markets entirely. The federal Commodity Futures Trading Commission, however, has taken the position that it has exclusive jurisdiction over prediction markets and has sued six states over the issue.

This creates a difficult balancing act for Polymarket. Stronger KYC checks and VPN enforcement could help the company show regulators that it is taking compliance seriously. But it may also frustrate users who joined prediction markets because they offered speed, privacy and fewer barriers than traditional financial platforms.

The broader trend is clear: prediction markets are being pulled out of the experimental internet category and pushed toward a more formal regulatory structure. That shift is already visible globally, including in Brazil, where authorities moved to restrict election betting and prediction markets, as covered in Swikblog’s report on Brazil’s prediction market crackdown.

For traders, Polymarket’s reported VPN crackdown is a warning that anonymous or location-masked access is becoming harder to defend. For the industry, it may be the beginning of a more regulated phase where identity checks, geolocation controls and anti-abuse systems become standard requirements rather than optional protections.

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