US Senators Urge CFTC Probe of Polymarket Over Deceptive Marketing
In brief
- Senators Curtis and Schiff demand CFTC investigation into Polymarket's influencer marketing practices.
- Wall Street Journal reports Polymarket paid creators for fake trades; 70% of 1,100+ videos featured fabricated bets.
- CFTC already conducting ongoing investigation into Polymarket, per Journal and CNBC reports.
- Senators question CFTC's resources and regulatory authority over prediction market platforms.
Influencer Campaign Under Scrutiny
The Wall Street Journal reported on June 20 that Polymarket paid influencers to create videos depicting fake trades on websites resembling the platform. Many content creators failed to disclose these payments to their audiences. The Journal reviewed over 1,100 videos and found that 70% featured fabricated bets totaling nearly $2 million, raising questions about the scope of the undisclosed campaign.
Curtis and Schiff expressed alarm at what they see as a systemic problem. The senators stated that prediction markets are being portrayed as "free money" to retail audiences despite their speculative nature and regulatory ambiguity.
CFTC Investigation Underway
The letter arrives as the CFTC was already investigating Polymarket, according to reports from the Journal and CNBC on Friday. CNBC reported that the investigation is ongoing and extensive, citing a person familiar with the inquiry.
A Polymarket spokesperson told Cointelegraph the company was conducting a comprehensive audit of active promotional content to ensure compliance with regulatory standards.
Broader Questions on Regulatory Authority
The senators raised a deeper concern: whether the CFTC has the capacity to police prediction markets at all. Curtis and Schiff argue that these contracts shouldn't be treated as derivative products with hedging value and aren't in the public interest. The CFTC has claimed authority over prediction markets because the platforms are registered with the agency and operate under federal commodities law. However, the regulator has also sued nine US states that filed legal action against prediction markets, accusing the platforms of offering unlicensed sports betting through event contracts.
Curtis and Schiff asked CFTC Chair Selig for written responses to a list of questions by July 10, including whether the CFTC is investigating Polymarket and whether it has the resources to regulate prediction markets effectively. Their letter signals growing bipartisan skepticism about the agency's approach to an emerging asset class that sits uneasily between financial derivatives and gambling.
"If accurate, these allegations are deeply troubling and demand immediate scrutiny from the Commodity Futures Trading Commission" — Senators John Curtis and Adam Schiff, in letter to CFTC Chair Mike Selig
