US Senators Call for CFTC Investigation Into Polymarket Over Alleged Deceptive Marketing

Concerns about the enforcement capabilities of the CFTC have been raised by Senators John Curtis and Adam Schiff following what they described as a “troubling” report regarding Polymarket’s advertising practices.

An investigation into the prediction market platform Polymarket has been requested from the Commodity Futures Trading Commission by a bipartisan group of US senators after reports emerged that social media influencers had been paid to publish videos featuring fabricated bets.

A letter was sent to CFTC Chair Mike Selig on Thursday by Republican Senator John Curtis and Democratic Senator Adam Schiff, expressing concern that Polymarket had employed deceptive marketing practices to promote gambling-style products to audiences in the United States.

“If accurate, these allegations are deeply troubling and demand immediate scrutiny from the Commodity Futures Trading Commission,” they wrote.

The letter was issued after a report published by The Wall Street Journal on June 20 alleged that Polymarket had paid influencers to record fake trades on websites designed to resemble its platform and that the payments were not disclosed by many of those content creators.

The Journal reported that more than 1,100 videos had been reviewed and that fake wagers totaling nearly $2 million were featured in roughly 70% of them.

Polymarket Faces Growing Regulatory Scrutiny Amid Reports of CFTC Investigation

In response to the report, a spokesperson for Polymarket told earlier this week that a comprehensive review of active promotional content was being carried out to ensure compliance with the platform’s standards as well as all relevant regulatory and legal disclosure obligations.

The letter was also sent ahead of reports published by The Wall Street Journal and CNBC on Friday indicating that an investigation into Polymarket was being conducted by the CFTC.

CNBC reported, citing a source familiar with the matter, that an extensive and ongoing investigation into Polymarket is being conducted by the CFTC, although no details were provided regarding when the inquiry originally began.

Polymarket declined to provide any comment regarding the letter or the reported investigation being carried out by the CFTC.

Prediction markets have experienced a sharp rise in popularity in recent months, generating billions of dollars in monthly trading volume, while concerns about the CFTC’s capacity to oversee these platforms have been raised by Senators Curtis and Schiff.

“The CFTC has consistently claimed regulatory oversight over prediction markets and event-based contracts,” the senators wrote. “However, with prediction markets being routinely promoted by content creators as ‘free money,’ there appears to be little justification for distinguishing them from gambling activities.”

“These contracts do not serve the public interest and should not be regarded as derivative instruments with legitimate hedging purposes,” the senators added. “We continue to be concerned that the law is not being properly enforced by the Commission and that it is not adequately equipped to function as a federal gambling regulator.”

The CFTC has maintained that it holds jurisdiction over prediction markets because the platforms are registered with the agency and function under the framework of federal commodities law.

The regulator has launched lawsuits against nine US states that initiated legal proceedings against prediction market platforms, alleging that unlicensed sports betting was being offered through event-based contracts.

Senators Curtis and Schiff requested that written answers be provided by Selig by July 10 to a series of questions, including whether Polymarket was being investigated by the CFTC, whether the reported advertising practices were lawful and whether sufficient resources are available to properly oversee prediction markets.