Polymarket Faces Scrutiny Over Election Betting Ads Despite U.S. Trading Ban

Polymarket, a platform known for offering decentralized prediction markets, has come under scrutiny for promoting election betting via U.S.-based influencers, despite a federal ban preventing American users from placing bets on the platform.

According to a Bloomberg report, Polymarket reached out to U.S.-based social media influencers in September to help drive awareness of its election-related markets. Influencers with large followings, such as Mr Moist (5.5 million followers), HoodClips (12 million followers), and finance influencer Eric Pan (203,000 followers), have all run sponsored posts promoting Polymarket with thematic tags related to the 2024 U.S. presidential election.

Xavi Fahard, who manages an Instagram account with over 16 million followers, confirmed that he signed a multi-post deal with Polymarket. Fahard noted to Bloomberg that the ads performed similarly to other sponsored content, indicating that the campaign had a broad reach.

Polymarket’s efforts to promote its platform to U.S. users are controversial because of the federal ban that prohibits U.S. citizens from participating in real-money betting on the platform. In response to inquiries, a Polymarket spokesperson told Bloomberg that the company’s primary goal was not to drive betting but to promote its data and news content. The spokesperson clarified that most visitors to the site consume news without engaging in actual trades, which is the focus of the marketing effort.

The controversy surrounding Polymarket’s U.S. outreach escalated following a New York Times report, which revealed that a single trader placed approximately $28 million in bets on Donald Trump-related outcomes. The trader, who reportedly has a financial services background, spread the bets across four accounts. While the platform denied any claims of market manipulation, Polymarket officials explained that the trader’s actions were based on personal views rather than an attempt to manipulate market outcomes.

Polymarket’s operations have drawn attention from both regulators and the public, as U.S. authorities scrutinize the platform’s outreach and the risks posed by large bets in high-profile political markets. The platform’s push to engage U.S. influencers amidst a federal ban underscores ongoing challenges in balancing advertising and compliance with local laws.