Senators Adam Schiff (D-CA) and John Curtis (R-UT) have sent a formal letter to Commodities Futures Trading Commission Chairman Michael Selig, demanding answers about alleged deceptive marketing practices at prediction market platform Polymarket.
The letter, addressed directly to Selig, poses six questions to the CFTC, including whether the regulator is actively investigating the allegations and whether it believes it holds the authority and expertise to deliver the same consumer protections offered by other financial regulators.
What the WSJ Report Alleged
The senators were responding to a Wall Street Journal report which alleged that Polymarket paid to stage $1.9 million in fake bets as part of a promotional marketing campaign. The report described content creators entering trades into a fabricated version of the Polymarket platform specifically to generate buzz around the service.
Polymarket told the WSJ in response that it would conduct a comprehensive audit of its promotional materials. Separately, the WSJ reported on Friday that the CFTC is already conducting an “ongoing, extensive investigation” into Polymarket, though it remains unclear whether that inquiry is focused specifically on the advertising allegations.
Senators Argue Prediction Markets Blur Line With Gambling
In their letter, the senators argued that the CFTC’s claim to regulatory authority over prediction markets carries responsibility for enforcing consumer protections on par with other regulators.
“The CFTC has repeatedly asserted regulatory authority over prediction markets and event contracts, including through its enforcement actions and its rules governing event contracts listed on CFTC-registered entities,” the senators wrote, adding that with content creators routinely portraying prediction markets as “free money,” there is “little basis for treating them differently from gambling.”
They pushed further, writing that “with promises of fast money, influencer marketing, social media virality, and a deliberate blurring of what is real and what is staged, it is unsurprising that Americans view purchasing event contracts on prediction markets as much closer to gambling than investing.” The pair argued the Commission should be skeptical of claims that sports, entertainment, and other betting-style contracts are materially different from gambling simply because they are offered through event contracts.
Broader Scrutiny on Prediction Markets
The lawmakers, who said they are “concerned” the CFTC is not appropriately enforcing the laws under its purview, set a deadline of July 10 for the regulator to respond to their six questions.
Polymarket and the broader prediction market sector have faced a cascade of scrutiny throughout the year. Some US states have filed charges alleging platforms are operating illegal gambling operations, while separate concerns have emerged around insider trading allegations. House Republicans have also introduced a bill seeking to ban lawmakers from trading on prediction market platforms.
