Polymarket Underdoing CFTC Investigation, Facing Consumer Advocates Lawsuit

• According to a CNBC report, the CFTC is conducting an investigation into Polymarket
• This comes in the same week as the Wall Street Journal publishing a report on an alleged misleading marketing campaign from Polymarket
• The National Association of Consumer Advocates today also filed a lawsuit against Polymarket accusing the company of a deceptive marketing campaign

---

According to a CNBC report published today, the Commodity Futures Trading Commission is conductive an extensive investigation into prediction market platform Polymarket.

The investigation comes on the heels of a Wall Street Journal report published earlier this week alleging the prediction market operator conducted a misleading marketing campaign which showed content creators winning trades when they were not actually putting any money at risk. The subject of the CFTC investigation has not been revealed.

“We are conducting a comprehensive audit of active promotional content to ensure it complies with our standards, as well as applicable regulatory and legal disclosure requirements,” a Polymarket spokesperson told CNBC in a statement. 

Allegations of a Deceptive Marketing Campaign

The Wall Street Journal today also published a report in which two Senators called for a federal investigation into the prediction market platform.

The two Senators, John Curtis (R-Utah) and Adam Schiff (D-CA), called for a federal investigation into Polymarket following the Wall Street Journal’s report of a Polymarket marketing campaign described as “misleading.”

It is unclear if the CFTC investigation into Polymarket is based on these requests from Senators Curtis and Schiff.

Published on June 20, the Wall Street Journal published reports of phony trades made on fake sites makes to resemble Polymarket’s platform in company advertising. One such video showed a college student winning $100,000 after placing a $1,000 bet on President Donald J. Trump saying the word “McDonald’s” during the month of the transaction.

However, according to the Wall Street Journal, in actuality 50 accounts made that bet on Polymarket’s platform during the same month and all of them lost when President Trump never said the word “McDonald’s.”

The Wall Street Journal reviewed 1,105 videos created by 10 creators tied to Polymarket’s marketing vendor, with 70% of them featuring a creator making a trade. The on-screen trades totaled $1.9 million, with 118 videos showing these creators winning nearly $900,000.

None of the bets were real, the Wall Street Journal reported, and if those same bets had been made with real money they would have actually lost more than $166,000.

These reports have led to at least one lawsuit against the prediction market company.

Lawsuit Filed Based on WSJ Reports

Following the Wall Street Journal report, the National Association of Consumer Advocates today filed a lawsuit against Polymarket in the Superior Court of the District of Columbia, accusing the company of “orchestrating a sweeping deceptive marketing campaign.”

The complaint names Polymarket Founder and CEO Shayne Coplan, who the lawsuit says hold “ultimate decision-making authority” over the company’s operations, and Chief Marketing Officer Matthew Modabber, who oversees the advertising practices at the center of the lawsuit.

In addition to deceptive practices, the lawsuit alleges that Polymarket unfairly directed their manipulative marketing efforts at college-aged consumers.

The lawsuit brings three claims under the Washington, D.C. Consumer Protect Procedures Act, including deceptive marketing of the Polymarket platform, deceptive failure to disclose the paid relationships behind the endorsement, and the unfair promotion of a gambling opportunity to college-age Americans.