Senators Adam Schiff (D-CA) and John Curtis (R-UT) have asked the Commodity Futures Trading Commission (CFTC) to respond to allegations raised in a recent Wall Street Journal report claiming that Polymarket paid to stage $1.9 million in fake bets as part of a marketing campaign.
What Are the Senators Asking?
Last week, The Wall Street Journal published an investigation into Polymarket’s alleged deceptive marketing practices. According to the news outlet, the predictions market company paid college-age online content creators to post videos portraying themselves as having won bets on the platform.
In the letter addressed to CFTC Chairman Michael Selig, the pair of senators is seeking a response to several important questions. Arguably, the most important one is whether or not the CFTC is investigating the new allegations against Polymarket. In addition, Schiff and Curtis also want to know if the CFTC has the power and expertise to properly regulate the growing prediction markets scene and adequately protect users. While earlier this month, the CFTC proposed placing stricter limits on event contracts, numerous concerns, such as insider trading, remain.
A Polymarket spokesperson told WSJ that the company would conduct a comprehensive review of its promotional materials. Meanwhile, it was also reported that the CFTC is conducting an “ongoing, extensive investigation” into Polymarket. However, it remains unclear whether the probe specifically targets its advertising claims and if Schiff and Curtis would get the answers they seek from it. Speaking of which, they gave the CFTC until July 10 to respond to their letter’s questions.
Senators Say CFTC Should View Contracts as a Form of Gambling
The senators said the incident demonstrated why the CFTC should be skeptical of claims that sports, entertainment, and other betting-style event contracts are materially different from gambling simply because they are structured as event contracts. According to the pair of senators, the combination of promises of quick profits, influencer marketing, social media virality, and the deliberate blurring of authentic and staged content has hurt many Americans. They argue that many people view purchasing event contracts on prediction markets as far more akin to gambling than investing.
Schiff and Curtis further explained that the CFTC has consistently asserted its regulatory authority over prediction markets and event contracts through enforcement actions and rules governing contracts listed on CFTC-registered entities. They added that, with content creators routinely portraying prediction markets as “free money,” there is little justification for treating them differently from gambling.
Polymarket and other prediction market providers have been under constant scrutiny from various local and national bodies, both in the US and abroad. Even former CFTC officials have criticized the practice, putting into question the legal definition of what sports event contracts actually mean.