Needless to say, this is categorically different from a company "moving" to Panama, without even maintaining a physical presence there, for the express purpose of avoiding American regulators. It's a false equivalence.
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[1] https://en.wikipedia.org/wiki/Delaware_Court_of_Chancery
Additionally, the claim "most of the companies registered in Delaware are not trying to dodge US federal regulations" strikes me as dubious. Every company seeks to lower its regulatory burden. If they're not finding loopholes, then often they're the ones writing the regulations and funding congressional campaigns. I'm not sure the claim Polymarket is unique re its relationship to the government in this respect is credible. They seem to be working quite intimately with the current administration on returning from their Biden era "ban".
> Corporate law experts say while there is nothing illegal about housing a business inside a shell company, the practice is often a strategic move to protect a firm's wealth or shield it against lawsuits and action from government regulators.
What is the thought process of someone writing this? Does this article have any meaningful or critical thought behind it?
Many people do not, which is why it is noteworthy, even if it is standard.
Maybe let's make it not normal?
The law firm at that address was not their registered agent. Their ToS mandated arbitration with an entity that doesn’t exist.
See also: Polymarket gamblers threaten to kill me... 1090 comments https://news.ycombinator.com/item?id=47397822
If it was just your average company it wouldn't be very interesting.
Mostly because international litigation is, let's say, fraught issues (as in "good luck!")
If I say "contact my lawyer" and you show up to his office and the receptionist informs you that I'm not a client ...
Now the opposite is happening. Businesses have no incentive being located in the same physical area they do business in. In fact, they have opposite incentives. The closer they are to their customers and workers, the less they can do things with impunity.
I don't understand the rest of the article, tho... It complains that company that (officially) left the US market and already blocks US ips from participating... isn't doing enough? Officially there's no ground to demand more
If you really want to solve the problem - start hunting down unofficial means. Investigate influencers that started mentioning Polymarket out of the blue. Look into news outlets that decided to start mentioning polymarket as supposed proxy of popular opinion. Start advertizing campaigns against gambling addiction the same way as against smoking
It doesn't make it acceptable, just endemic
Polymarket is forbidden to sell their product within the US. That doesn't mean they can't take investment from or employ or even be headquartered in the US.
If the shoe fits..
The only purpose I could see for this intro is to prime the reader negatively before any argument.
https://en.wikipedia.org/wiki/Panama_Papers#Illegal_activiti...
https://www.theguardian.com/news/2016/apr/03/the-panama-pape...
(Wow. It's only been 10 years since the leak occurred? How time flies.)
It would help a lot actually for protecting people's money instead of driving it offshore.
But it doesn't look like making USA compete in this $15B market is NPR's goal with this article.
"It would help a lot actually for protecting people's money instead of driving it offshore. But it doesn't look like making USA compete in this $75B market is NPR's goal with this article."
Polymarket's actual offices are remote-first, but they have a small space set up in New York City which is the closest thing they have to an HQ. It's basically set up like a coworking / hotel sort of space.
Polymarket appears to have people who have both the ability to shape outcomes and anonymously profit on those outcomes.
the most obvious and maybe most concerning one is military related insider trading. Just two weeks ago a guy was sentenced for using classified information to gamble, which mind you is the literal point of the market but from the perspective of US military security is a disaster. In addition military bets apparently pay out significantly more than regular bets, suggesting more insider trading. The idea isn't too far fetched that someone could push to carry out or botch an operation to cash out on a betting market at which point we're in dystopian novel territory I guess.
https://www.yahoo.com/news/articles/military-insiders-may-be...
If they're incorporated there because that makes regulatory compliance easier, then that's not "dodging", that's just... doing what's allowed.
And it's not like incorporating in Delaware is a get-out-of-jail-free card. If the company does have a presence in other states, the laws of those states are binding in many circumstances; the state of incorporation is irrelevant there. And there's always US federal law. Choice of state isn't going to change anything when the feds come knocking.
The issue at hand is Polymarket claiming they are based in Panama, outside the US's jurisdiction, but presumably being headquartered in the US. You might say this is no different from a company being incorporated in, say, the UK, doing business there, hiring people, maintaining an office, and then also having offices in the US, but... this is not the same, and it's a little odd that you seem to be missing that fact.
And on top of that, often multi-nationals will have a legal entity in every country where they operate. Do they have one in the US? If not, and they are de-facto headquartered here, that's beyond sketchy. And even if they do, if they've structured things such that they can shield their assets from US legal judgments for crimes or torts committed on US soil, that's also pretty damn sketchy.
That said, I was under the (perhaps mistaken) impression that the US company was shut down under the settlement agreement. So if this is indeed a shell I'd be curious to know the name and jurisdiction of the core business.
Well, that's my point: a shell company doesn't do any substantial business involving customers, payroll, etc, while Polymarket does seem to be actually operating a business. The "shell company" appellation implies that Polymarket is merely a cover for hiding wealth. Actually, NPR doesn't even make the claim that Polymarket is a shell company, but just trots out a fact about shell companies without any particular connection to Polymarket in the middle of this article! It's an implication without any attempt to provide backing facts, and they technically said nothing in this about Polymarket that needs to be sourced:
> Corporate law experts say while there is nothing illegal about housing a business inside a shell company, the practice is often a strategic move to protect a firm's wealth or shield it against lawsuits and action from government regulators.
I don't use Polymarket and may be a bit biased against them due to their X posting, but I used to work at NPR and am fairly dejected about how far they've gone in the past 10 years.
Here's an example: https://www.ncbi.nlm.nih.gov/books/NBK230628/
This is another excellent article that discusses some of the problems, and has links to other such articles: https://www.wsj.com/finance/investing/polymarket-kalshi-bett...
I don't really see what you have presented as an "argument" against polymarket. [1] tells us that it has costs and benefits. Well everything has costs and benefits, but those are subjective anyway. That is not an argument against it and cannot be, because no science can tell you what is good or bad (i.e. what counts as benefit or cost), let alone whether the good outweighs the bad. [2] tells us that polymarket exhibits the same property as any other securities market, which is that only a very small amount of players tend to make a profit. Again, that is not an argument against it unless you want to include some kind of resentment or digust that some profit more than others.
Inequality of profits is both expected and unconcerning. The social function of the stock exchange is not to ensure everyone receives a fair or equal profit, but to ensure that the pricing of ventures and assets is correctly (as is possible) adjusted to expected future demand of consumers. For polymarket, the function is to express information about expectations of future events. There are straightforward economics reasons why polymarket and similar institution tends towards expressing our expectations about future events.
As for expected losses, yes, there is a legitimate trade in securities in which some will earn money from their investments and some will lose money from them. Securities like stocks, bonds, derivatives, commodities, and so forth have real things of value underneath them, like business income and stuff made from the commodities. (And it’s not a minority who earn long-term gains from these; there are entire pension schemes covering millions of people that are funded from them from 401(k)s to TIAA.)
Predictions, on the other hand, are valued solely based on human estimations. That’s not in itself a problem, but the issue is that predictions markets, unlike securities markets, are not regulated. Compare the fact that insider trading of securities is illegal and punished with fines and imprisonment, while in a predictions market, insider trading is incentivized and occurs with unsurprising frequency (e.g. big wins by a privileged few who bet on the timing of military actions). Market manipulation is the problem, not that some will make the wrong bets. The rules and conditions of the game must be fair, even if the outcome of the game isn’t.
And I haven’t even begun to mention the issue of the things you can bet on in prediction markets that are ethically problematic, like the probability of harm (including death) occurring to someone or a group of people.
There was a recent episode of Last Week Tonight on the subject; John Oliver’s team expresses these concerns with more humor and better framing than I can give myself:
There are very legitimate reasons to incorporate in another location. Some are not only not sketchy, but even altruistic, e.g. incorporating in another state for the purpose of incorporating as a PBC.
Did they incorporate as a PBC?
Is there actual case law of people using a company's status as a PBC to effectively hold it to account for detrimental corporate conduct?
And what of incorporating somewhere, having your headquaters somewhere else, having your main office in a third place, and this all owned by a shell company in a fourth place, with all your assets owned by a fifth company, which rents it back to you for extortionate rates, your EU subsidiary in a sixth place, the actual EU offices in a seventh place, etc etc etc.
Thats not even approaching the trickery and deceit that is accepted as completely normal - let alone the ones that actually get in trouble
Do these sorts of things have legal benefits for the companies involved? (yes)
If I had a company over a certain size, I'd probably do it too. But it has sharply negative consequences for the rest of society, and for trust in the system in general.
"operating illegally in full view" vs "legal gray area" is not a determination that can be made based on your subjective view of what "makes a thing OK". The fact that you pair the accusation that they are "operating illegally in full view" with the notion that you can condemn a thing that is not "currently being prosecuted" only further undermines your argument. Your moral objection is your judgement to make, the question of what is illegal cannot be. The latter is exclusively the domain of the courts, not any individual (or collective) moral outrage. Your seeming desire to conflate the two to satisfy your personal feelings unfortunately undermines whatever cogent points you may have re their legality on the merits.
The fact is they are currently working with the government on a return to the US markets. engaging in a government process such as they are seems to not resemble anything akin to "operating illegally in full view of everybody". You would be more convincing if you would levy your criticism in more reasonable terms. I personally suspect there is a lot more "gray area" here than you seem to contemplate.
This is a seriously tiresome argument. How about this? Feel free to cite how their recent moves will enable them to
1. satisfy regulators that they are not violating the Commodity Exchange Act; 2. satisfy other parts of the government that they are not simply illegal gambling; 3. satisfy the states that are actively suing them RIGHT NOW.
It does not matter that there are friendly people in the administration. The fact is that they were told to wind down their markets and leave. They did not do this. Even if their behavior may become legal in the future, it is currently illegal.
My personal objection is IN ADDITION to the legal problems. My personal opinion is that this business and the people who run it SUCK. There’s no conflating: both things are true. Why do you insist on sticking up for douchebags?
Why would it? Choosing the state to incorporate in has very little to do with US federal regulations. If the US wants to come after your company for some reason, they file in federal court, and the state you're incorporated in is irrelevant.
When incorporating, you choose the state based on its business-related laws and how they might apply to your company. You choose based on the experience of their judicial system in handling business matters. You might choose because there are a ton of other businesses incorporated in that state, and that's created a lot of court cases and a lot of precedent that can give your own legal team more confidence in how different sorts of legal challenge might play out.
If you were trying to avoid US federal regulations, you might incorporate in Delaware for the simple reason that Delaware is a safe default, given how common it is for companies to incorporate there. Incorporating in an unusual state could raise an eyebrow here or there. But ultimately it's not going to matter all that much. And even if it's true that a federal-regulations-skirting company would have a measurable benefit to incorporating in Delaware, there's no reason to believe that lots of companies incorporated in Delaware are trying to skirt federal regulations. That's just an unfounded assertion.
As an aside, it's not true that every company wants to decrease its regulatory burden. Once a company gets large enough, lobbying for extra regulation can be a barrier to entry for possible competitors. Also consider that "reducing regulatory burden" doesn't necessarily mean doing something illegal. In the case of Polymarket, they probably are, but plenty of other companies find ways to reduce their regulatory compliance needs in perfectly legal ways.
huh? you aren't making a coherent argument. registering in any US state you are still subject to the same federal regulations, Delaware is not different, it offers no shelter from federal regulations.
in fact, if it is not your primary state of operation, then it subjects you to federal regulations for interstate commerce where you might not otherwise be.
> I don't get it. Most companies registered in the state I live in, for example, are not actually located here. They simply receive mail through their registered agent there. Why would this be news?
>> On the other hand, most of the companies registered in Delaware are not trying to dodge US federal regulations.
What I found dubious was predicated on this "on the other hand" - that is the notion that Polymarket is really doing anything unique re its dealings with US federal regulators.
As per your last paragraph that touches on this, I already addressed this in another thread, but I'm simply not convinced that Polymarket is very unique here. It is common for new enterprises creating new industries to come into conflict with the law, and for both to evolve. Obviously Polymarket is not some large incumbent. The point was I find the notion that they are doing something singularly illegal or out of step with how most businesses operate dubious.
I detect that in comments around this chain you and some others seem to want to create a hard barrier between the law and enterprise. That's not how reality works. Regulations change. Policies are modified. New laws are passed. Governments and businesses often collaborate in this process. To get back to what I was trying to respond to, I am simply asserting that indeed this should really not be "big news".
Who more often jail time for sketchy things? Poor or rich?
Does anyone of sound mind make it a class issue? Of course not. It would make about as much sense as blaming every rich person for random white collar crimes.
Those who disagree with you are crazy.
Right.
Says one vain but ultimately useless meat suit whose food and shelter the rest of us don't have to concern ourselves with because it's so inconsequential an existence it props nothing important up.
Ah it's people like you that provide the most entertainment in life. Watching you shill delusions about your economic achievements in a physical reality that doesn't care you exist and a social system that provides no assurances your efforts today will afford you food and shelter in the future.
As the other 8 billion on the planet while you live don't notice you exist.
But you're of sound mind; a privilege you give yourself to begin with. Lol. Sad.
If they get caught, do they get jail time or a fine?
How many poor people do you need to get the same number of victims compared to the sketchy things of rich people?
Businesses choose Delaware because their corporate law and court system are are both well developed and streamlined which makes investors comfortable.
There are plenty of other states that are better choices for tax reasons.
The charitable take is that most corporations want to comply with a state's regulations because unintentional compliance violations are painful and expensive, and it is relatively easy to be confident that you are compliant as a Delaware corp.
* it's easy and well-documented - the main thing you have to remember is to check the boxes that say this is an actual company, and not a holding company for a boat (where the real tax dodging is)
* it was reported to make acquisitions easier (as the company acquiring you would either also be a Delaware corp or it would be more straightforward even if they weren't.)
If you run into some legal question somewhere down the line, investors and their lawyers will be much more comfortable with Delaware law than some other state who may not have clear language on the books and/or have never tested that particular situation in court before.
However, we were strongly told that for early stage startups, some (CA) VCs would only bother looking at CA or DE companies.
(It also doesn't hurt that most businesses also find Delaware's business law to be reasonably fair and advantageous. Musk notwithstanding, of course.)
This is somewhat confused. Most common law jurisdictions merged their courts of law and courts of equity into a single unified court system long-ago; Delaware is unusual in not having done so
But if you bring an equitable cause of action, courts in other jurisdictions will apply equity to decide it. And Delaware’s Court of Chancery applies common law as well.
There are real advantages to Delaware’s judicial system from a corporate perspective-a specialised court system can be more responsive because it isn’t weighed down with other types of cases, doesn’t have juries, offers judges with deep experience in that specific area of law, etc. But it isn’t purely due to keeping separate equity courts; other jurisdictions could get similar results by establishing specialised courts for particular types of cases, without necessarily having to rely on the old law-vs-equity jurisdiction to draw the line.
(Obligatory disclaimer that these are ~30-year-old memories of some dumb 20-something’s understanding of the law at the time.)
That whatever group has a worse impact should be “gotten rid of”? What if poor people are worse? You’d abandon that line of thinking entirely, I imagine.
What’s next? If people with red cars are statistically more likely to commit crimes we should round them up as long as you don’t personally have a red car?
Given that, would you rather have a case tried in a court that has only tried a handful of other cases, or would you rather be in a court that has handled a mountain of cases, with lots of information as to what the law really means, as it has played out in real-life scenarios?
Being tried under a legal regime where there is a ton of past history seems a lot easier to reason about than one where there isn't much.
> It's as if one is joining a club that has rules of business conduct clearly documented.
Well, yes. The law is the law, sure, but the "documentation" is much more than just the law, as written.
Many people in this thread cite most court systems are the same yet some people choose to incorporate in Delaware. I happen to be incorporated in Massachusetts because that is where I live.