'Deeply Troubling': Senators Demand CFTC Probe Into Polymarket's Deceptive Ads as Revenue Surpasses $1 Billion

Polymarket's rise to a $1 billion (£788 million) annualised revenue run rate, six weeks after expanding access to its US exchange, is facing a regulatory challenge. Two US senators have urged the Commodity Futures Trading Commission (CFTC) to investigate allegations that the prediction market company used staged trades, simulated websites and undisclosed influencer promotions to attract users.

In a letter to CFTC Chairman Michael Selig, Senators John Curtis and Adam Schiff said the allegations were 'deeply troubling' and called on the regulator to examine whether Polymarket's marketing practices complied with consumer-protection standards.

The senators cited a Wall Street Journal investigation that alleged Polymarket paid social media creators to promote trading activity through websites designed to resemble its platform, including simulated transactions that did not involve real money. The report also alleged that some influencers failed to disclose paid relationships with the company and that overseas contractors helped distribute promotional content to US audiences.

Polymarket's US Expansion Drives Revenue Surge

The growth reflects the rapid rise of prediction markets, platforms that allow users to trade contracts tied to the probability of future events, a category that sits between financial markets, technology platforms and online betting.

Polymarket allows users to trade contracts tied to future outcomes, including politics, sports and other public events. The company's US exchange operates separately from its international platform and was developed after Polymarket previously faced regulatory action from the CFTC.

In 2022, the regulator ordered Polymarket to pay a $1.4 million (£1.1 million) civil monetary penalty after finding that the company operated an unregistered event-based binary options market. Polymarket agreed to shut down non-compliant markets and cease violations of the Commodity Exchange Act.

The company's latest growth has coincided with rising interest in prediction markets as platforms attempt to establish themselves as alternatives to traditional financial products.

Senators Question Alleged Marketing Practices

The latest controversy centres on whether Polymarket blurred the distinction between genuine market activity and promotional content.

According to the Wall Street Journal investigation, creators posted videos showing apparent trading success through simulated versions of Polymarket's interface. Some promotional material showed users appearing to earn large sums despite the activity not representing actual trades.

The allegations have also prompted a consumer-protection lawsuit accusing Polymarket of misleading advertising practices, including claims that promotional campaigns targeted college students.

Curtis and Schiff argued that the allegations raise wider questions about the level of oversight applied to prediction-market companies.

'The public-facing behavior alleged here does not resemble a sober financial market designed for hedging or price discovery,' the senators wrote.

They questioned whether companies should be able to avoid traditional gambling protections by presenting betting-style contracts as financial products regulated through financial markets.

CFTC Faces Pressure Over Prediction Market Oversight

The dispute comes as regulators continue to debate how prediction markets should operate in the US.

The senators asked the CFTC whether it is investigating the allegations and what steps the agency has taken regarding advertising standards, influencer disclosures, age verification and responsible-use protections.

They also questioned whether the agency has the authority and resources to oversee products that overlap with areas traditionally regulated by state and tribal gaming authorities.

Polymarket Defends Its Platform

Polymarket has defended its platform as a financial marketplace rather than a gambling service. A company spokesperson said Polymarket had spent five years building 'the world's largest prediction market' and was focused on improving how users interact with event-based markets.

'We are applying those learnings to our US platform, where our focus is on intuitive market experiences, institutional-grade liquidity and a consumer experience that sets the standard for the category,' the spokesperson said.

Polymarket's $1 billion (£788 million) revenue milestone highlights the commercial potential of prediction markets. But the regulatory scrutiny surrounding its advertising practices could influence how far companies in the sector can expand under US financial-market rules.