A bipartisan pair of US senators has called on the Commodity Futures Trading Commission to investigate prediction market platform Polymarket after reports that it paid social media influencers to create videos showing fake bets.
Republican Senator John Curtis and Democratic Senator Adam Schiff sent a letter to CFTC Chair Mike Selig on Thursday, saying they were concerned that Polymarket “used deceptive marketing tactics to promote gambling-style products to US audiences.”
“If accurate, these allegations are deeply troubling and demand immediate scrutiny from the Commodity Futures Trading Commission,” they wrote.
The letter came after The Wall Street Journal reported on June 20 that Polymarket paid influencers to film fake trades on websites resembling its platform and that many creators did not disclose that they had been paid by Polymarket.
The Journal said it reviewed over 1,100 videos and found that 70% featured fake bets amounting to nearly $2 million.
In response to the report, a Polymarket spokesperson told Cointelegraph earlier this week that it was “conducting a comprehensive audit of active promotional content to ensure it complies with our standards, as well as applicable regulatory and legal disclosure requirements.”
The letter also came before The Wall Street Journal and CNBC reported on Friday that the CFTC was investigating Polymarket.
CNBC reported, citing a person familiar with the inquiry, that the CFTC has an ongoing and extensive investigation into Polymarket, but the timeline for when the investigation began was not shared.
Polymarket declined to comment on the letter or on the reported CFTC investigation.
Prediction markets have grown rapidly in popularity and have seen billions of dollars in volume each month, with Senators Curtis and Schiff expressing their concerns about the CFTC’s ability to regulate the platforms.
Source: John Curtis
“The CFTC has repeatedly asserted regulatory authority over prediction markets and event contracts,” the senators wrote. “Yet with content creators routinely portraying prediction markets as ‘free money,’ there is little basis for treating them differently from gambling.”
“These contracts are not in the public interest and should not be treated as derivative products with hedging value,” they added. “We remain concerned that the Commission is neither enforcing the law appropriately, nor is equipped to serve as a federal gambling regulator.”
Related: US senators push to end CFTC ‘assault’ on state oversight of prediction markets
The CFTC has argued that it has authority over prediction markets as the platforms are registered with the agency and operate under federal commodities law.
The regulator has sued nine US states that have filed legal action against prediction markets, alleging the platforms offer unlicensed sports betting via event contracts.
Senators Curtis and Schiff asked Selig to give written responses to a list of questions by July 10, asking if the CFTC was investigating Polymarket, if the reported advertising was legal and if it has the resources to police prediction markets, among others.
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