The Commodity Futures Trading Commission has opened a wide-ranging probe into prediction market operator Polymarket that extends beyond marketing tactics to multiple areas of the company’s operations, according to several media reports.
What’s happening
- Bloomberg reports the CFTC’s inquiry covers Polymarket’s business activities, including its social media operations. CNBC says the probe is active but declined to specify when it began. Neither the CFTC nor Polymarket has issued an official statement.
- The inquiry follows a Wall Street Journal investigation alleging Polymarket paid dozens of mostly college-aged content creators to post staged trading videos to lure users.
Allegations from the Wall Street Journal
- The WSJ reviewed 1,105 videos posted between December 2025 and mid-May (reporting period) and found about 70% showed simulated trades rather than real market activity.
- According to the WSJ, those promotional videos displayed roughly $1.9 million in fabricated bets and nearly $900,000 in fake winnings—amounts that, on the live platform, would have been losses.
- The newspaper reported creators were paid about $2,000–$3,000 per month through marketing contractor Virality and were allegedly instructed not to disclose the sponsorship.
- Analytics firm Tubular estimates the campaign reached more than 140 million views across TikTok, YouTube and Instagram.
- The WSJ also says Polymarket used replica versions of its platform to create the promotional clips.
Polymarket’s response
- Polymarket told CNBC it is conducting a comprehensive audit of its active promotional content to ensure it meets company, legal and regulatory disclosure standards.
Regulatory background and congressional scrutiny
- Bloomberg notes that the CFTC, alongside the Department of Justice, previously closed a probe into whether Polymarket improperly allowed U.S. users to participate without filing charges last year.
- Polymarket has barred Americans from its main platform since a 2022 settlement, though some users have reportedly continued to access the service via VPNs. The firm has also been trying to restore lawful access to U.S. markets and recently launched a CFTC-regulated U.S. exchange (previously reported).
- Senators Adam Schiff and John Curtis sent a letter to CFTC Chair Michael Selig asking the agency to confirm whether it had opened an investigation into Polymarket’s advertising practices and to explain how it has worked to prevent U.S. users from accessing the platform since the 2022 settlement. Their letter also asked whether the CFTC has adequate supervision tools for prediction markets and requested information on advertising standards, influencer disclosure rules, consumer protections and age verification.
Why this matters
- The probe highlights regulatory and reputational risk surrounding prediction markets and crypto-adjacent advertising tactics, particularly influencer-driven campaigns that may blur the line between promotion and misrepresentation. If the CFTC’s investigation expands, it could result in enforcement action that shapes disclosure and marketing norms across the sector.
The inquiry would be the first major enforcement action against an event-contract platform under CFTC Chair Michael Selig, whose tenure has generally been seen as more supportive of prediction markets. Industry watchers will be watching for any official statements or enforcement moves from the agency.
Read more AI-generated news on: undefined/news
