Senators urge CFTC to probe Polymarket over fake ad claims

U.S. senators have urged the Commodity Futures Trading Commission to investigate Polymarket over allegations that the prediction market platform used deceptive advertising to reach American users despite restricting access in the country.

According to a letter obtained by The Wall Street Journal, Senators Adam Schiff and John Curtis asked CFTC Chair Michael Selig to examine claims that Polymarket promoted its markets through simulated trading websites, staged transactions, and undisclosed paid influencer campaigns. The lawmakers wrote that, if the allegations are accurate, they warrant immediate regulatory scrutiny.

The request follows a Wall Street Journal investigation alleging that Polymarket hired content creators to record trades using fake trading interfaces instead of the live platform.

The report also claimed some influencers failed to disclose they were being paid and that promotional material exaggerated potential winnings, creating a misleading impression for U.S. audiences, even though the platform does not serve domestic users.

The senators requested that the CFTC provide a written response by July 10 stating whether it has opened an investigation into the allegations. If the regulator has decided against pursuing the matter, they asked it to explain that decision.

Lawmakers question CFTC oversight of prediction markets

Beyond the advertising allegations, Schiff and Curtis asked the CFTC to outline the consumer safeguards it currently expects prediction market operators to maintain. Their questions covered advertising standards, age verification, responsible gaming tools, addiction warnings, affiliate marketing practices, and disclosure requirements for influencer promotions.

The lawmakers also challenged whether the agency has the authority, expertise, and resources needed to carry out responsibilities traditionally handled by state and tribal gaming regulators. Their letter asked whether the CFTC can deliver comparable licensing, enforcement, and consumer-protection measures while continuing to argue that prediction markets fall under its exclusive jurisdiction.

Those concerns arrive as the CFTC continues defending that position in court. Earlier this week, the regulator sued Kentucky after state authorities moved against prediction market operators, including Polymarket and Kalshi, arguing that federal law gives the agency sole oversight of those products.

Schiff and Curtis cautioned the regulator against allowing federal oversight to become a way for companies to avoid state or tribal gaming laws or weaken consumer protections through misleading promotional campaigns.

Regulatory pressure extends beyond prediction markets

The letter lands during a period of increasing debate over how the CFTC is supervising crypto-linked derivatives.

Last week, CME Group sued the regulator and Chairman Michael Selig after the agency approved U.S. crypto perpetual futures, arguing the contracts should be classified as swaps rather than futures under the Dodd-Frank Act.

According to CME’s complaint, the CFTC departed from its long-standing interpretation of perpetual-style contracts and approved the products without going through formal rulemaking. CME Chief Executive Terrence Duffy had previously stated that the exchange planned legal action after platforms including Kalshi and Coinbase received approval to list regulated crypto perpetual futures.

On Friday, the CFTC and the Securities and Exchange Commission opened a 60-day public consultation on crypto derivatives regulation. The agencies are seeking feedback on portfolio margining across securities, swaps, futures, and related products while separately reviewing whether Dodd-Frank definitions governing swaps and security-based swaps still match current derivatives markets.

SEC Chair Paul Atkins said closer coordination between the two regulators could improve market efficiency, strengthen consumer protections, and reduce overlapping regulatory responsibilities as crypto derivatives and tokenized financial products continue to expand in the U.S.