Polymarket has announced to CBS News that it is presently conducting an audit of its promotional content following a recent investigation by the Wall Street Journal.
The inquiry revealed that the prediction market compensated online content creators to produce videos that misleadingly suggested customers collectively earned $1.9 million.
The Journal’s findings, released on Saturday, were based on interviews with social media personalities and a thorough analysis of over 1,100 TikTok videos from ten creators.
The majority of these videos showcased fictitious trades carried out on imitation websites resembling Polymarket, as reported by the Journal, which asserted that these activities were part of a strategic initiative to attract users to its offshore, unregulated platform.
Additionally, Polymarket enlisted a marketing contractor to instruct “clippers,” individuals responsible for redistributing videos to amplify their reach, to propagate this content, as outlined in the investigation.
One illustrative video depicts a college student purportedly winning $100,000 after placing a $1,000 wager that President Trump would publicly mention the word “McDonald’s” within that month.
However, actual data from Polymarket’s website indicated that 50 accounts bet on Mr. Trump’s usage of the fast-food chain’s name—and all incurred losses, according to the Journal.
Furthermore, various other videos exaggerated potential earnings from parallel wagers, the Journal’s investigation uncovered.
About 118 videos—roughly 10% of those scrutinized—portrayed creators winning nearly $900,000, when in fact, if they had executed identical bets, they would have lost over $166,000.
As the premier prediction market globally, we pledge our commitment to fostering accurate, fair, and transparent operations.
We reside within an ever-expanding sector and continually assess enhancements in engaging and earning the trust of our audience, a Polymarket spokesperson articulated in a statement to CBS News.
“In alignment with that commitment, we are undertaking a comprehensive audit of our active promotional content to guarantee compliance with our standards, as well as applicable regulatory and legal disclosure requirements.”
Ongoing Scrutiny of Polymarket
Similar to other prediction markets, Polymarket enables users to place bets on the outcomes of various events, including sports, elections, and weather phenomena.
Recently, the organization has weathered increased scrutiny due to allegations of insider trading. In a notable case from May, federal prosecutors accused a Google employee of accruing over $1.2 million on Polymarket by leveraging confidential business intelligence.
Earlier this year, a data analyst disclosed to “60 Minutes” that he had identified multiple instances of Polymarket accounts earning significant sums by accurately wagering on U.S. military operations, occasionally achieving a suspiciously high success rate.
Polymarket maintains that insider trading is strictly forbidden on its platform. To bolster its regulatory standards, the company updated its rules in March to disallow trades predicated on “stolen confidential information” or illicit tips.
Meanwhile, Kalshi, Polymarket’s principal competitor, did not respond to inquiries regarding whether it employs comparable marketing tactics to promote its services.
Regulatory authorities prohibited Polymarket from operating in the United States in 2022 after the firm settled allegations concerning the operation of an unregistered options exchange.
Last year, the Commodity Futures Trading Commission (CFTC), the regulatory body governing prediction markets, granted Polymarket permission to initiate a U.S.-regulated platform.
However, this service is exclusive, accessible only via invitation and limited to iPhone users, as reported by CBS News. Consequently, a significant portion of Polymarket’s trading volume remains concentrated in international markets.
The CFTC has not provided a comment regarding whether it plans to investigate the Journal’s revelations about Polymarket.
The Federal Trade Commission states that “Federal law mandates that advertisements must be truthful, not misleading, and—where appropriate—substantiated by scientific evidence.”
An FTC representative declined to comment on whether the agency intends to pursue an investigation of Polymarket in light of the Wall Street Journal’s findings.
Source link: Cbsnews.com.
