Polymarket Faces Scrutiny for Promoting Election Betting via Influencers Despite US Trading Ban

Polymarket, the popular prediction market platform, is under scrutiny for partnering with U.S.-based influencers to promote election betting, despite a federal ban on American users placing bets on the platform.

According to a Bloomberg report, Polymarket reached out to several U.S.-based social media influencers to help drive awareness for its election betting markets, even though U.S. users are prohibited from participating in trading on the platform. The outreach occurred in September and involved prominent Instagram accounts like Mr. Moist (5.5 million followers), HoodClips (12 million followers), and finance influencer Eric Pan (203,000 followers), who posted sponsored content promoting Polymarket.

Xavi Fahard, an Instagram influencer with over 16 million followers, confirmed a multi-post collaboration with Polymarket, stating that the ads performed similarly to other sponsored posts on his account. Fahard's involvement highlights the platform's efforts to tap into influencer-driven marketing to increase visibility and drive traffic, despite legal restrictions on U.S. users.

Targeting the U.S. Market

Polymarket, which has been increasingly targeting U.S. consumers to expand its reach, has come under fire for seemingly flouting U.S. regulations around online betting. A spokesperson for the platform confirmed that the company has worked with influencers to promote its data and betting services to a U.S. audience. However, the spokesperson defended the initiative, explaining that Polymarket's goal is to drive traffic to its website where, according to the company, the majority of visitors are simply consuming news and not placing trades.

Polymarket has emphasized that it’s focused on providing market insights and data, and that only a small percentage of users actively place bets. The company insists that it operates within the bounds of the law, despite the ban on U.S. users participating in real-money betting on the platform.

Controversy and Market Manipulation Concerns

The scrutiny surrounding Polymarket intensified after a New York Times report revealed that a single trader, identified as having a financial services background, placed approximately $28 million in Trump-related bets on the platform across four separate accounts. The massive bet raised concerns of potential market manipulation, but Polymarket has denied these allegations. The platform argued that the large wager was made based on the trader's personal political views rather than any intention to manipulate market outcomes.

This incident has brought additional attention to the platform's operations, as regulators and the public question whether Polymarket is engaging in activities that violate U.S. laws or encourage illegal behavior, especially given the ongoing legal grey area surrounding online betting markets.

The Road Ahead for Polymarket

As the legal and regulatory landscape surrounding prediction markets and election betting evolves, Polymarket’s activities, particularly its marketing efforts in the U.S., are likely to continue drawing attention. While the platform insists it is focused on promoting information and data, critics argue that its aggressive influencer-based marketing strategy could run afoul of federal regulations.

The situation raises important questions about the boundaries of legal online betting, particularly as influencers and social media platforms become an increasingly powerful tool for promoting digital services, even in areas where regulations are still unclear.

As of now, Polymarket is staying the course with its promotional campaigns, despite the legal challenges it may face. It remains to be seen how regulators will respond to these tactics and whether the platform will be forced to reconsider its approach to marketing in the U.S.