Polymarket launches probe after Wall Street Journal report alleges deceptive marketing
(CBS NEWS) – Sources from CBS News say that Polymarket told CBS News that it is auditing its promotional content after a Wall Street Journal investigation found the prediction market paid online content creators to produce videos that the newspaper said falsely showed customers winning a total of $1.9 million.
The WSJ’s findings, published Saturday, are based on interviews with social media content creators and an analysis of more than 1,100 TikTok videos from 10 creators. Most of the videos featured phony trades executed on dummy sites designed to resemble Polymarket, according to the Journal, which said the company’s actions were part of a campaign to lure users to its offshore, unregulated platform.
Polymarket also hired a marketing contractor to instruct so-called clippers, people who redistribute videos from creators to extend their reach, to repost the content, according to the media outlet’s investigation.
One social media video shows a college-aged student winning $100,000 after placing a $1,000 bet that President Trump would say the word “McDonald’s” publicly sometime that month, according to the WSJ. But the actual trade on Polymarket’s website shows 50 accounts bet that Mr. Trump would use the restaurant chain’s name and that all of them lost, the paper reported.
Other videos also misrepresented the earnings users could have made on parallel bets, the Journal’s report found. The outlet reported that 118 videos — approximately 10% of the ones it analyzed — depicted creators winning almost $900,000, when in reality, if they had placed identical bets, they would have lost more than $166,000.
“As the world’s leading prediction market, we are committed to maintaining accurate, fair and transparent markets. We are part of a rapidly growing industry and are constantly evaluating ways to improve how we’re engaging and earning the trust of our audience,” a Polymarket spokesperson said in a statement to CBS News. “As part of that commitment, we are conducting a comprehensive audit of active promotional content to ensure it complies with our standards, as well as applicable regulatory and legal disclosure requirements.”
Existing scrutiny on Polymarket
Like other prediction markets, Polymarket allows users to place wagers on the outcomes of future events, such as sports, elections, weather and many other activities.
The company has faced scrutiny in recent months over allegations of insider trading. In one recent case, federal prosecutors in May alleged that a Google employee made more than $1.2 million on Polymarket using confidential business information.
Earlier this year, a data analyst also told “60 Minutes” he has spotted other cases of Polymarket accounts raking in millions by correctly betting on U.S. military operations, sometimes achieving a suspiciously high win rate.
Polymarket has said insider trading is prohibited on its platform. The company updated its rules in March to prohibit trades based on “stolen confidential information” or illegal tips.
Regulators banned Polymarket from operating in the U.S. in 2022 after the company settled allegations that it was operating an unregistered options exchange.
Last year, the Commodity Futures Trading Commission (CFTC), the government agency that oversees prediction markets, granted the company permission to launch a U.S.-regulated platform. However, that service is invite-only and accessible only on an iPhone, sources have told CBS News. As a result, much of Polymarket’s trading volume remains concentrated in its overseas markets.
The CFTC did not respond to a request for comment on whether it plans to examine the Journal’s findings about Polymarket.
Truth in advertising
According to the Federal Trade Commission, “Federal law says that ad[s] must be truthful, not misleading, and, when appropriate, backed by scientific evidence.”
An FTC spokesperson declined to comment on whether the agency plans to investigate Polymarket in light of the Wall Street Journal’s findings.
“The whole point of an exchange is that the order book is real and anyone can audit it,” Jason Trost, CEO of Smarkets, a U.K. prediction market and Polymarket competitor, said in an email. Smarkets recently filed for a license with the CFTC to operate in the U.S.
“Regulated exchanges keep settlement records and answer to the CFTC for exactly this reason,” Trost added.
Kalshi, Polymarket’s main competitor, did not respond to a request for comment on whether it has used similar marketing tactics to promote its services.
