Polymarket Offers Odds on British Banks to Collapse in New Controversy

The prediction market platform Polymarket is courting controversy once again as it welcomes bets on British banks to collapse before the end of the year.

The American firm has opened a market on whether HSBC and Lloyds, two of the UK’s largest banking chains, will be forced to close, alongside domestic institutions like JP Morgan and BNP Paribas.

Polymarket is once again set to profit from a situation that would spell economic disaster worldwide, with their punters able to manipulate matters by withdrawing their money en masse from the banks named – a similar scenario forced Credit Suisse to close in 2023.

Predicting a Global Crisis

At the time of writing, more than £58,000 had been matched on the ‘yes’ and ‘no’ side of the market on whether HSBC and/or Lloyds would be forced to close by the end of 2026.

There are fears that a global economic meltdown is possible, with geopolitical tensions, enormous consumer debt and rising inflation causing UK bond and US Treasury yields to soar.

Those converging pressures can weaken the positions of banks, with some Polymarket users speculating that the downturn could be catastrophic for household names in banking.

It begs the question as to why a betting site, as Polymarket has been categorised in numerous US states, is able to offer odds on such a scenario unfolding.

Doubts Over Polymarket Integrity

Of course, punters in the UK are banned from using Polymarket, while the platform has been cut off in numerous US states.

But it can still be accessed in more than 100 other countries, with suggestions that some big money bettors are using ‘proxies’ overseas to invest in its prediction markets.

The Financial Conduct Authority (FCA) has spoken with international regulators over its concerns about ‘market integrity’, with concerns that manipulation and even insider trading are rife on the platform.

Bank Run

The rise of social media movements can also impact markets. The GameStop debacle in January 2021 saw the retailer’s valuation increase 1,700% in the infamous ‘short squeeze’, which saw a coordinated effort amongst amateur investors on Reddit to artificially manipulate the market.

And, in 2023, Credit Suisse collapsed after a ‘bank run’, in which large numbers of customers simultaneously withdraw their money over fears that the institution will run out of money, saw them pay out £55 billion in just three months.

As speculation mounts over the stability of HSBC and Lloyds, fuelled by Polymarket activity, there are fears that another mass bank run could be devastating for those banks and the UK economy as a whole.

Polymarket Insider Trading?

Polymarket representatives have been courting expansion into the UK and European markets, holding talks with financial services regulators in a bid to be recognised as an investment platform – rather than betting.

But it’s thought that their efforts have fallen on deaf ears, with legislators unwilling to consider licensing a platform that enables its customers to ‘bet’ on aliens landing on earth, amongst other bizarre markets.

Polymarket has also done little to dissuade decision makers that the site isn’t a haven for insider trading. In the first half of 2026, nine Polymarket accounts – which bet exclusively on US military action in Iran – made nearly £2 million by predicting the exact dates on which the US committed their first air strike and the subsequent announcement of a ceasefire.

However, the firm has rejected such claims, stating: “The only insider trading arrest in prediction-market history happened because we caught it; a military insider allegedly trading on confidential information in a prediction market.

“We flagged the activity and referred it to federal authorities, working directly with the DOJ and CFTC to bring the case forward.”