Polymarket Paid for Fake Winning Bet Videos

What Happened?

Polymarket, the cryptocurrency-based prediction market platform, has been accused of paying dozens of content creators — mostly college students — to post videos simulating large winnings from betting on the platform. According to a Wall Street Journal investigation, the videos showed fictitious winnings totaling nearly $410,000, but none of those bets were real. The company built near-perfect replicas of its website and instructed creators to perform simulated transactions on those fake sites, hiding that they were being paid by Polymarket. Additionally, the company hired a social media army to copy and repost the videos, achieving over 140 million views on TikTok, YouTube, and Instagram, according to analytics provider Tubular.

The modus operandi was meticulous: Polymarket worked with a marketing contractor to coordinate the campaign. In a message reviewed by the WSJ, the contractor instructed its social media army to repost content from 10 specific creators. The creators, who received between $2,000 and $3,000 monthly, sent the finished videos to Polymarket for review. If a video was not attractive enough or showed obvious signs of being fake, the company asked for a reshoot. Polymarket even provided scripts with bullet points on what to say, according to creators who have worked with the company and a recruitment website. Some videos briefly showed URLs indicating they were test environments for Polymarket engineers, a detail creators did not always hide.

Why Is This Important?

This case exposes deceptive marketing practices that may violate U.S. advertising laws, which require individuals paid to promote a product to disclose that relationship. Polymarket not only omitted this disclosure but actively instructed creators not to reveal they were paid. Furthermore, the company promoted videos showing how to trade on inside information, which could have additional legal implications. Internal materials show that Polymarket and its marketing contractor promoted videos discussing opportunities to use inside information on the platform, a particularly sensitive topic in the context of cryptocurrencies and financial markets.

The scandal comes at a time when Polymarket has been banned in the U.S. since 2022, following a settlement with the Commodity Futures Trading Commission (CFTC) for operating an unregistered exchange. Despite the ban, users can still access it via VPN, and the fake video campaign was specifically targeted at U.S. users, adding a layer of regulatory controversy. The FTC has already shown interest in cases of deceptive advertising in the crypto sector, such as the BitConnect case in 2018, where influencers were fined for not disclosing payments.

Potential Consequences

The U.S. Federal Trade Commission (FTC) could investigate Polymarket for deceptive advertising. If the company is found to have violated disclosure rules, it could face significant fines. The FTC has imposed multi-million dollar fines in similar cases, such as the $250,000 against crypto influencers in 2022. Additionally, the CFTC could reopen its case against Polymarket, as the company may have violated the terms of the 2022 settlement by continuing to promote itself to U.S. users. The platform's reputation is severely damaged, which could affect user trust and transaction volume. Polymarket has already announced it will conduct an audit of its active promotional content, a move that seems more reactive than preventive.

The content creators involved could also face consequences, as failing to disclose their commercial relationship could make them complicit in deceptive practices. The WSJ investigation has already led some creators to add the '@polymarket partner' tag to their bios, a belated attempt to comply with rules. The impact on the prediction market could be significant: platforms like Kalshi and PredictIt, which operate within the U.S. regulatory framework, could benefit if users lose trust in Polymarket. However, the broader crypto ecosystem could suffer a reputational blow, reminiscent of the FTX scandal in 2022, where lack of transparency led to the platform's collapse.

What Readers Should Know

• The winning bet videos on Polymarket that you saw on social media were likely fake and paid for by the company. Of the 145 videos analyzed by the WSJ, none corresponded to real bets.
• Polymarket is banned in the U.S., but continues to operate internationally and promote itself to U.S. users via VPN. The company is headquartered in New York but its main platform is registered in Panama.
• Advertising laws require any sponsored content to be clearly identified as such. The FTC updated its guidelines for influencers in 2023, emphasizing the need for clear and visible disclosures.
• The company has announced it will conduct an audit of its active promotional content, but has not specified timelines or corrective measures.

This case recalls other deceptive marketing scandals in the tech sector, such as practices by some cryptocurrency companies that paid influencers without disclosing payments. In 2021, the FTC fined the cryptocurrency company BitClout for similar practices. Lack of transparency undermines trust in prediction markets and the broader crypto ecosystem, which is already struggling to gain legitimacy. As regulatory authorities intensify scrutiny, Polymarket could become a case study on the limits of viral marketing in the cryptocurrency era.