Polymarket’s $1.9 million fiction

TL;DR: Polymarket paid dozens of content creators to post hundreds of fake bets totaling about $1.9 million on social media—with many claiming to have won these nonexistent trades, according to a Wall Street Journal investigation. It’s a window into how the prediction market site has manufactured viral moments to lure in users, appearing to offer “free money” when the data shows the vast majority of traders take a loss.

What happened: Of 1,133 videos that the WSJ analyzed, 70% of them showed someone placing a bet—all on fake dummy sites replicating the real Polymarket, some of which appeared to be on the platform’s own engineering test servers. (One used the misspelled URL “poiymarket.”) More than 100 videos showed nearly $900,000 in winnings from fake bets that, in reality, would have lost these creators over $166,000.

Creators were reportedly told not to disclose that they were paid, which could be a violation of both the FTC’s endorsement disclosure rules (for Polymarket and the creators) and commodities law. Enforcement could include civil penalties and, in the case of the CFTC, even a ban on operating for Polymarket’s US exchange. In a statement to the WSJ, Polymarket said that it was “committed to maintaining accurate, fair, and transparent markets” and that it was doing an audit of current promotional material.

The play: In many of the videos, creators used attention-grabbing phrases to hook viewers: The word “free” appeared in nearly a quarter of the analyzed videos, with the line “Is this just free money?” repeated in 27, according to the WSJ.

But the real engine of Polymarket’s hype machine appears to be a marketing firm it hired that provided an army of “clippers” to repost footage. A video that got just 151 views in about a month and a half racked up over 2 million when a clip was posted to YouTube.

The actual odds: For most people, prediction markets are the exact opposite of “free money.” A WSJ analysis from May found that just 0.1% of Polymarket accounts that have been trading since late 2022 raked in 67% of total profits on the platform.

Then there’s all the apparent insider trading. A recent NPR report interviewed several election campaign staffers who admitted to using internal polling data to score a quick windfall on the platform. The lesson: Unless you’ve got privileged information or some very sophisticated data tools, the house—sorry, the market—usually takes your money.

Bottom line: With its viral marketing machine, Polymarket has made itself impossible to ignore. Now, likely also by the regulators it would probably rather not hear from. —WK