U.S. Lawmakers Push For CFTC To Investigate Polymarket Over Deceptive Advertising

U.S. Senators Adam Schiff and John Curtis are pushing for the Commodity Futures Trading Commission (CFTC) to probe prediction market platform Polymarket over allegations of deceptive advertising. This marks the latest scrutiny into prediction markets, even as the regulator seeks to protect its exclusive jurisdiction over these platforms.

Senators Push For Investigation Into Polymarket

In a letter to CFTC Chair Michael Selig, seen by the WSJ, the senators stated that allegations against the platform, if accurate, demand immediate scrutiny by the regulator. They cited the WSJ report, which alleged that the prediction market platform used simulated trading websites, staged transactions, and undisclosed paid influencer content to promote markets, which were not available to U.S. users.

WSJ reported that Polymarket paid these creators to film trades on fake websites, and some of them also failed to disclose the paid advertisements. Furthermore, the advertisements used fake materials to imply larger winnings, which were aimed at luring U.S. audiences.

The CFTC has notably yet to release a statement regarding these allegations against the top crypto prediction market platform. The Commission regulates the platform and other platforms, such as Kalshi, which offer prediction markets that mostly trade as swaps and are under the CFTC’s regulatory purview.

Meanwhile, the senators demanded a written response from the CFTC no later than July 10 answering whether it is investigating Polymarket over the WSJ’s allegations. If not, they asked the regulator to provide a reason for not doing so.

Senators Question CFTC’s Capacity as Prediction Markets Regulator

The senators also asked the CFTC to provide answers on what consumer-protection standards it currently requires of prediction market platforms like Polymarket regarding advertising, age verification, addiction warnings, responsible-gaming tools, affiliate marketing, and influencer disclosures.

Furthermore, Senators Schiff and Curtis asked the CFTC, based on its belief that it has exclusive jurisdiction over prediction markets, whether it believes it has the authority, resources, and expertise to replicate the consumer-protection, licensing, and enforcement actions that state and tribal gaming regulators currently perform.

The CFTC has notably sued several states in a bid to defend its exclusive jurisdiction over these prediction markets. As CoinGape reported, CFTC recently sued Kentucky over its action against Polymarket and Kalshi, seeking to prevent the enforcement of state laws against these platforms.

However, the senators warned the CFTC against such actions, asking the regulator not to allow companies to invoke CFTC oversight to avoid state and tribal gaming laws, weaken consumer protections, or promote betting-style products through deceptive campaigns.