Polymarket, a prominent prediction market platform, faces serious allegations following a recent investigation by the Wall Street Journal. The inquiry revealed that the company engaged in questionable marketing practices by compensating primarily college-age content creators to stage fake winning bets on replica versions of its website. The total bets portrayed across 1,105 videos amounted to approximately $1.9 million, but none were legitimate.
This revelation contradicts Polymarket’s primary assertion of operating on a public blockchain, which allows all trades to be settled transparently and audited by anyone. Instead, the marketing efforts relied on fabricated trades on unofficial sites lacking any verifiable ledger.
The legitimate trades on Polymarket are conducted via the Polygon blockchain, settling in USDC. Outcomes in these markets are resolved using UMA’s permissionless oracle system, which permits users to propose or challenge conclusions by posting a bond of $750. Importantly, all trades and positions are public, reinforcing the platform’s commitment to transparency.
However, the investigation highlighted that the promotional campaign operated exclusively off this transparency framework. The Journal analyzed 1,105 videos from 10 creators between December and mid-May, discovering that approximately 70% displayed a bet—none of which were authentic. A notable example featured a creator claiming to have won $100,000 on a bet linked to former President Donald Trump supposedly uttering the word “McDonald’s.” In reality, Trump never made this statement in January, and the video clip was sourced from a previous date. In the real market, over 50 accounts made similar bets, all of which lost money.
Many of the video clips were filmed using manipulated sites that mimicked Polymarket’s design, such as poiymarket.com. Across 118 videos, creators boasted about fabricating nearly $900,000 in winnings, while genuine bets would have resulted in losses exceeding $166,000. Each creator earned between $2,000 and $3,000 monthly and was reportedly instructed not to reveal their compensation. A marketing firm subsequently promoted these clips, amassing over 140 million views.
The fallout from this scandal is particularly problematic for Polymarket, which had already been under scrutiny. In 2022, US regulators fined the platform $1.4 million for operating an unregistered market and mandated the cessation of non-compliant trades. Following this, Polymarket reincorporated in Panama, with its office allegedly located within a shared law firm that had previous associations with the now-defunct FTX.
As Polymarket attempts to reestablish its market presence in the US and aims to bring its exchange onshore, the timing of the fake bet revelations is unwelcome. The marketing efforts seem specifically geared toward American users, who can still access the offshore platform via a virtual private network (VPN).
The questions surrounding user trust are not new; prior analyses indicated that most users ended up losing money, despite the enticing portrayal of easy profits in the promotional videos. Now, as Polymarket competes with regulated rivals like Kalshi, it has pledged to audit its promotional content rigorously. This internal review may significantly influence how regulators perceive its approach to establishing a legitimate US market presence and could pivotally impact the future of the prediction market industry as a whole.
