US senators urge CFTC probe of Polymarket over fake ads
US senators urge CFTC probe of Polymarket after a troubling report on the platform's advertising. Republican Senator John Curtis and Democratic Senator Adam Schiff told CFTC Chair Mike Selig they are concerned about the agency's enforcement ability and whether deceptive marketing promoted gambling-style products to U.S. audiences. The bipartisan letter asks the regulator to investigate Polymarket's promotional practices and respond in writing by July 10.
Key Takeaways
- Sens. John Curtis (R-Utah) and Adam Schiff (D-Calif.) called on the CFTC to investigate Polymarket's promotional practices.
- The letter follows a Wall Street Journal report that Polymarket paid influencers to film fake bets on lookalike websites.
- Lawmakers asked the CFTC for written responses by July 10 on enforcement, legality, and regulatory capacity.
- Polymarket said it is auditing promotional content; the company declined to comment on the letter.
- Reports also said the CFTC has an ongoing investigation into Polymarket, though timing details were not disclosed.
Why did senators urge a CFTC probe of Polymarket?
A bipartisan pair of U.S. senators has called on the Commodity Futures Trading Commission to investigate the prediction market platform Polymarket after it reportedly paid social media influencers to make videos of fake bets. Republican Senator John Curtis and Democratic Senator Adam Schiff sent a letter to CFTC Chair Mike Selig on Thursday, saying they were concerned Polymarket used deceptive marketing tactics to promote gambling-style products to U.S. audiences.
If accurate, these allegations are deeply troubling and demand immediate scrutiny from the Commodity Futures Trading Commission, they wrote. The senators remain concerned that the Commission is neither enforcing the law appropriately, nor is equipped to serve as a federal gambling regulator.
What did the Wall Street Journal report allege?
The letter comes after reporting by The Wall Street Journal on June 20 that Polymarket paid influencers to film fake trades on websites resembling its platform and that many creators did not disclose that Polymarket paid them. The Journal said it reviewed over 1,100 videos and found that 70% featured fake bets amounting to nearly $2 million.
In response to the report, a Polymarket spokesperson told Cointelegraph earlier this week that it was conducting a comprehensive audit of active promotional content to ensure it complies with our standards, as well as applicable regulatory and legal disclosure requirements. Polymarket declined to comment on the letter or on the reported CFTC investigation.
What questions are lawmakers asking the CFTC?
Senators Curtis and Schiff asked Selig to give written responses to a list of questions by July 10. The questions include whether the CFTC is investigating Polymarket, whether the reported advertising was legal, and whether the agency has the resources to police prediction markets, among others.
The CFTC has claimed it has authority over prediction markets as the platforms are registered with the agency and operate under federal commodities law. The regulator has sued nine U.S. states that have filed legal action against prediction markets to accuse the platforms of offering unlicensed sports betting via event contracts.
How does this fit into broader prediction market scrutiny?
Prediction markets have recently exploded in popularity and have seen billions of dollars in volume each month, with Senators Curtis and Schiff expressing their concerns about the CFTC's ability to regulate the platforms. The letter also came ahead of reports in the Journal and CNBC on Friday that the CFTC was investigating Polymarket.
CNBC reported, citing a person familiar with the inquiry, that the CFTC has an ongoing and extensive investigation into Polymarket, but the timeline for when the investigation began was not shared. For more regulatory and market developments, see our Fintech & Crypto Alerts coverage.