Key facts
- Senators John Curtis and Adam Schiff have urged the CFTC to investigate Polymarket.
- The senators allege Polymarket used deceptive marketing tactics to promote gambling-style products.
- A report indicated Polymarket paid social media influencers to create videos of fake bets.
- Polymarket is conducting an audit of its promotional content.
- Reports suggest the CFTC is already conducting an investigation into Polymarket.
A bipartisan group of U.S. senators, John Curtis (R) and Adam Schiff (D), has called for the Commodity Futures Trading Commission (CFTC) to investigate the prediction market platform Polymarket. The senators expressed concern that Polymarket employed deceptive marketing tactics, including paying social media influencers to create videos of fake bets, potentially exposing U.S. audiences to gambling-style products.
The senators' letter to CFTC Chair Mike Selig follows a report by The Wall Street Journal detailing how Polymarket allegedly compensated influencers to film fake trades, with many creators failing to disclose the payments. The Journal's review of over 1,100 videos found that 70% featured fake bets totaling nearly $2 million.
In response to the allegations, a Polymarket spokesperson stated the company is conducting a comprehensive audit of its promotional content to ensure compliance with standards and disclosure requirements. Meanwhile, reports from The Wall Street Journal and CNBC on Friday indicated that the CFTC is already conducting an ongoing and extensive investigation into Polymarket.
Senators Curtis and Schiff highlighted the growing popularity of prediction markets and questioned the CFTC's capacity to regulate them effectively, arguing that content creators often portray these markets as easy money, blurring the lines with gambling. They asserted that these contracts are not in the public interest and lack hedging value, expressing concern that the CFTC is neither enforcing the law appropriately nor equipped to act as a federal gambling regulator.
The senators have requested written responses from CFTC Chair Selig by July 10 regarding the investigation's status, the legality of the reported advertising, and the commission's resources for policing prediction markets. The CFTC has previously asserted its regulatory authority over prediction markets, citing their registration with the agency and operation under federal commodities law.