Polymarket Faces Fresh Federal Scrutiny Over Marketing Practices

Federal regulators are reportedly examining prediction market platform Polymarket as renewed scrutiny surrounds its marketing practices and regulatory compliance. According to reports from The Wall Street Journal and CNBC, citing sources familiar with the matter, the Commodity Futures Trading Commission (CFTC) has launched an ongoing investigation, although the agency has not publicly confirmed the inquiry.

The reported investigation follows a Wall Street Journal exposé published last week that alleged Polymarket relied on deceptive promotional tactics. The report claimed that several college-age social media creators uploaded videos portraying fabricated betting wins to promote the platform.

The allegations also prompted bipartisan concern on Capitol Hill. Senators John Curtis of Utah and Adam Schiff of California sent a letter on Thursday to CFTC Chairman Michael Selig, urging the agency to investigate the conduct outlined in the Journal’s reporting. In their letter, the lawmakers described the alleged behavior as “deeply troubling” and argued it suggested the platform increasingly resembled gambling rather than a regulated financial market.

If pursued, the case would represent the first major enforcement action involving a prediction market during Selig’s tenure. The development comes after the CFTC and the U.S. Department of Justice ended an earlier investigation into Polymarket in July 2025 without filing charges. That previous probe, launched during the Biden administration, examined whether the company had violated an earlier settlement that prohibited U.S. users from accessing its prediction markets.

Separately, a consumer advocacy organization filed a lawsuit on Friday against Polymarket, Chief Executive Officer Shayne Coplan and Chief Marketing Officer Matthew Modabber. The complaint alleges the company employed multiple layers of manipulation to target college students with misleading advertising campaigns.

A spokesperson for the CFTC declined to comment on the reported investigation, while Polymarket did not immediately respond to media requests seeking comment.

Polymarket has faced regulatory attention for several years. In 2022, federal regulators barred the platform from serving U.S. customers after determining it had failed to properly register its markets. Interest in prediction markets surged after the 2024 U.S. presidential election, when users accurately predicted Donald Trump’s victory. In November 2024, FBI agents searched Coplan’s Manhattan apartment and seized electronic devices as part of a criminal investigation into whether U.S. users had continued trading on the platform despite the earlier settlement. Coplan later described the raid on X as a “last-ditch effort” by the Biden administration to target companies linked to political opponents. That investigation concluded without charges in July 2025, and Polymarket later received approval to resume operations in the United States under the Trump administration, which has generally supported federally regulated prediction markets despite ongoing debates over insider trading, market manipulation and whether such platforms should be classified as gambling.

Coplan briefly became the world’s youngest self-made billionaire at age 27 after the parent company of the New York Stock Exchange invested $2 billion in Polymarket, valuing the company at $9 billion. Rival prediction market Kalshi also produced billionaire founders after raising $1 billion at an $11 billion valuation in December, with co-founder Luana Lopes Lara becoming the world’s youngest self-made woman billionaire.

Donald Trump Jr. is both an investor in Polymarket and a paid adviser to Kalshi. According to the Financial Times, he previously held a $300,000 equity stake in Kalshi before the company’s valuation reached $2 billion in June 2025. Kalshi is now valued at $22 billion following a $1 billion funding round in May and is reportedly seeking another investment round that could value the company at $40 billion.