Two U.S. senators have urged the Commodity Futures Trading Commission (CFTC) to launch an inquiry into claims that Polymarket, a prediction market operator, utilized staged trading clips, fabricated betting activities, and undisclosed influencer promotions to enhance its platform’s visibility.
In a letter dated June 25 addressed to CFTC Chairman Michael S. Selig, Senators John Curtis (R-Utah) and Adam Schiff (D-Calif.) requested clarification from the agency on whether it is looking into the actions highlighted in a Wall Street Journal report and if these practices breach federal laws or CFTC regulations. They also asked for written answers to six regulatory and consumer protection queries by July 10.
The senators noted that the allegations “are extremely concerning and require immediate investigation.”
“The publicly visible conduct suggested here does not align with a mature financial market aimed at hedging or price discovery,” Curtis and Schiff articulated in their message. “We are worried that the Commission is not effectively upholding the law or equipped to function as a federal gambling regulation authority.”
Marketing strategy raises regulatory flags
According to sources cited by the senators, Polymarket allegedly compensated social media influencers to create videos showcasing trades supposedly performed on sites mimicking the company’s platform, even though these transactions were fabricated.
Reports further claimed that these creators failed to disclose their compensation, various videos employed modified news headlines or outdated clips to imply significant profits, and overseas staff was recruited to amplify content distribution among U.S. users.
The Wall Street Journal analyzed 1,105 videos produced mainly by young creators. Nearly 10% of these videos reportedly showcased outdated footage or manipulated headlines that suggested cumulative profits nearing $900,000. According to the paper’s evaluation, had the trades been real, they would have rather incurred losses exceeding $166,000. Several videos referred to the trades as “free money.”
Lawmakers expressed that this campaign may have fostered misleading perceptions of potential earnings and platform engagement.
The senators’ communication also asserted that operators of prediction markets should not escape consumer protection norms typically enforced on regulated gaming companies by presenting betting-style contracts as federally governed financial instruments.
The letter cited advertising regulations, age limitations, responsible gaming commitments, integrity monitoring, and state and tribal regulatory systems as illustrations of safeguards applicable to conventional gaming entities.
Current investigation coincides with congressional inquiry
This appeal emerges as reports from The Wall Street Journal suggest the CFTC is already engaged in an ongoing inquiry into Polymarket, according to sources familiar with the matter. The agency has yet to confirm this investigation publicly, and a CFTC spokesperson declined to comment.
If confirmed, this investigation would mark the first known enforcement probe related to a prediction market during Chairman Selig’s leadership. A previous joint inquiry by the CFTC and the U.S. Department of Justice into Polymarket’s compliance with a past settlement concluded in July 2025 without any charges, as regulators dismissed the case.
The senators further inquired whether the CFTC has undertaken any measures since its 2022 enforcement action to prevent Polymarket from marketing offshore services to U.S. audiences via affiliates, contractors, or influencers. They also sought clarification on the legalities surrounding the use of simulated trading content in advertising without clear disclosures and inquired about current consumer protection standards regarding influencer marketing, advertising, age verification, and responsible gaming tools.
Company’s response and legal challenges
Following the Wall Street Journal investigation’s publication, Polymarket stated it is dedicated to maintaining transparent and accurate markets and is undertaking an audit of its active promotional materials. The company also mentioned that it is reviewing the allegations and assessing its marketing strategies.
Additionally, Polymarket is involved in a lawsuit filed by the National Association of Consumer Advocates in Washington, D.C. The lawsuit targets Chief Executive Shayne Coplan and Chief Marketing Officer Matthew Modabber, claiming the company aimed its misleading advertising at college students to encourage trading while minimizing financial loss risks.
The complaint stated that Polymarket sought to lure young consumers into betting on its platforms through an effective method: by showcasing social media videos featuring popular and respected youth enjoying the Polymarket platform.
“However, instead of pursuing this target lawfully, the defendants employed various manipulative strategies to mislead college-aged consumers, who suffered significant consequences.”
The lawsuit demands unspecified monetary damages and an injunction against the marketing practices described in the Wall Street Journal investigation.
Prediction markets under increasing congressional oversight
Federal regulation of prediction markets has gained heightened bipartisan attention recently.
More than a dozen Senate Democrats have recently appealed to an appropriations subcommittee to restrict the CFTC from undercutting state and tribal regulation of prediction markets. In a parallel move, Rep. James Comer, chair of the House Oversight Committee, has initiated an investigation into insider trading regulations at both Polymarket and Kalshi. The committee has received briefings from both firms regarding their compliance measures, with the investigation still ongoing.
In 2022, Polymarket was barred from serving U.S. customers following a settlement with the CFTC for operating a non-registered event-based binary options platform, which led to a $1.4 million civil penalty and a directive to stop breaching the Commodity Exchange Act. The senators’ letter contended that subsequent claims involving influencer marketing and simulated trading activity necessitate further regulatory scrutiny as the company pursues expansion within the U.S. market.