Federal regulators opened an investigation into Polymarket, a betting platform for predicting events, Politico reported on June 26, 2026. That same day, two U.S. senators asked regulators to look into what they called misleading advertisements.

A news investigation by the Wall Street Journal had exposed the problem: Polymarket paid social media creators to make videos showing fake trades. They built websites that looked almost identical to Polymarket's real site. The creators pretended to place bets on these fake sites. Polymarket then paid to show these videos to Americans.

The Journal found nearly $2 million in fake bets spread across more than 1,100 videos. In seven out of ten videos they studied, creators were using the fake websites, not the real one.

Here's the legal issue. Polymarket is not allowed to operate in the United States. Back in 2022, the CFTC—the federal agency that regulates futures and certain types of betting—made a deal with Polymarket. The company paid $1.4 million and agreed to block American users. Now Polymarket appears to have run a major marketing campaign on American social media to advertise a product Americans are not supposed to use. The senators pointed out that according to Crypto Briefing, Polymarket was also allegedly letting American users place actual bets, which broke the 2022 agreement.

What Polymarket did is simple to describe. Creators were told to film themselves on fake copies of the Polymarket website. They pretended to place real bets. The videos were then shared widely to American audiences. The trades were not real. The websites were not real. But the videos looked real, and millions of Americans saw them.

Regulators face a tricky question here. The CFTC watches over a type of financial contract called derivatives. Polymarket uses a newer technology—blockchain—and its bets are written in a way that lets the company argue it is not subject to traditional financial rules. But the 2022 settlement showed the CFTC thought differently. Now investigators need to decide: can an offshore company run ads for a banned product inside the United States and face no consequences?

The two senators asked the CFTC to focus on the social media campaign itself—per Seeking Alpha. But regulators have much broader power once an investigation starts. They can look at almost anything they want.

Polymarket became famous during the 2024 U.S. election. People used it to bet on election outcomes. This caught the attention of politicians and news outlets. Now Washington is paying attention to prediction market platforms in general, especially ones that let people bet on elections, sports, and celebrity news.

Polymarket has not publicly responded to the investigation as of June 26, 2026. The company said in the past that it does not serve U.S. users and follows the law. That will be hard to claim now that there is proof of a planned campaign to reach Americans.