Polymarket Faces Fresh Regulatory Scrutiny Over Alleged Misleading Ads

Two U.S. senators have called on the Commodity Futures Trading Commission (CFTC) to investigate cryptocurrency-based prediction market Polymarket following allegations that the company used deceptive social media marketing to attract users. The bipartisan request adds fresh regulatory pressure on the platform as scrutiny of prediction markets continues to intensify in the United States.

Senators John Curtis of Utah and Adam Schiff of California sent a letter to CFTC Chairman Michael Selig urging the agency to determine whether Polymarket’s marketing practices violated federal law or the regulator’s rules. The lawmakers said the reported conduct raises questions about whether the platform is operating in a manner consistent with a legitimate financial market rather than promoting speculative gambling.

Questions Over Promotional Practices

The request follows reports alleging that Polymarket paid social media creators to produce videos featuring staged trades and exaggerated profits. According to the allegations, some creators used replica versions of the platform, outdated footage, or manipulated headlines to give viewers the impression that users had earned substantial returns. Many of the promotional posts reportedly failed to disclose that the creators had been compensated.

The senators argued that such tactics could mislead consumers, particularly younger audiences, about the risks associated with prediction market trading. They also asked the CFTC to clarify whether it has an active investigation into the company and whether the alleged conduct breaches existing regulations.

The latest controversy comes despite Polymarket’s long-standing restrictions on serving U.S. customers after reaching a regulatory settlement in 2022. Although the company has taken steps toward limited U.S. market access under revised regulatory arrangements, its offshore platform continues to draw significant global trading activity.

Broader Regulatory Pressure

The inquiry arrives as prediction markets face increasing attention from regulators, lawmakers, and consumer advocates. Several legal disputes are already underway over whether event-based contracts should be regulated as financial derivatives or treated as unauthorized sports betting products.

Separately, consumer advocates have challenged Polymarket’s advertising practices, arguing that promotional campaigns understated financial risks while emphasizing potential profits. Polymarket has previously stated that it is committed to maintaining fair and transparent markets and has said it is reviewing its promotional content following the allegations.