Original｜Odaily Planet Daily (@OdailyChina）

Author｜Wenser（@wenser2010）

Polymarket's false marketing has attracted the attention of regulatory authorities.

Recently, the U.S. Commodity Futures Trading Commission (CFTC) has conducted a broad investigation into the prediction market platform Polymarket, covering its social media activities and other business aspects. Previously, Republican Senator John Curtis and Democratic Senator Adam Schiff jointly wrote to CFTC Chairman Mike Selig, urging an investigation into Polymarket's KOL paid false marketing and fraudulent marketing practices to promote gambling products to American audiences.

At a time when the World Cup is driving a surge in prediction market transaction volume, this move may pour cold water on the development of this sector. More importantly, the investigation by the CFTC into Polymarket involves conflicts of interest between federal and local authorities and between officials and capital. (Recommended reading: “WSJ: Fake Websites, Fake Transactions, Real Promotions, Polymarket's Traffic Scam”).

The Wild Period of Prediction Market Marketing Ends, Regulatory Policies May Enter a Deep Waters Zone

If previously Polymarket's wild attempts at early expansion included college students posting fake profit videos and paid KOL exaggerating predicted profits, then the formal investigation by the CFTC is clear evidence that the wild growth phase of prediction markets has ended.

Prediction Market Platform Data Experiences Explosive Growth, Traditional Internet Giants Take Notice

As we enter June 2026, with the World Cup officially underway, prediction markets have received unprecedented attention, and trading volumes are steadily increasing.

a16z crypto data shows that prediction market trading volume has consecutively reached historic highs for three weeks. The trading volume for the entire market reached 14.4 billion dollars for the first time last week, a significant increase compared to about 5–6 billion dollars at the beginning of the year, while the previous historical high of around 10 billion dollars was only refreshed a week ago. From the platform side, its data has also experienced substantial growth:

• Latest data shows that Kalshi's nominal weekly trading volume has surpassed 10 billion dollars for the first time.
• Polymarket officially stated that its annual revenue has significantly exceeded 1 billion dollars, a progress made just six weeks after the U.S. trading platform released its waiting list; data indicates that the daily trading volume on the U.S. platform has increased from about 50 million dollars in mid-May to over 200 million dollars on June 20 (based on Dune Analytics data).
• The prediction market platform under Robinhood is growing rapidly, with annual revenue reaching 500 million dollars. As of June 25 in Q2, Robinhood's active contract trading volume reached approximately 12.3 billion trades, and based on a standard rate of 1 cent per contract, the prediction market revenue for that quarter is expected to be at least 123 million dollars. Moreover, its recently launched Rothera prediction market platform achieved over 900 million trades in its first week, bringing nearly 60% growth in active contract trading volume for Robinhood.

Such impressive data has also attracted the attention of stock market giant Meta. According to media reports, Meta CEO Mark Zuckerberg has urged the company to explore partnerships with prediction markets Polymarket and Kalshi. Meanwhile, Meta is developing an application called Arena that resembles a prediction market.

Various signs indicate that prediction markets have evolved from a niche sector a few years ago to a rapidly expanding industry. In the face of this trend, regulatory bodies are bound to take action, and the recent outbreak of false marketing events at Polymarket serves as a timely "soft knife," providing an opportunity for regulatory intervention. I believe that regulatory departments may gradually clarify the boundaries for prediction market platforms in areas such as marketing, event contract content, and transaction fees, aiming to strengthen investor protection and clearly distinguish them from traditional gambling operations.

At the same time, as the investigation deepens, the power struggle between federal regulatory bodies represented by the CFTC and state-level regulatory authorities is also gradually coming to light.

When the U.S. CFTC Clashes with U.S. States: The Battle for Regulatory Power Over Prediction Markets

Last Tuesday, the U.S. CFTC officially filed a lawsuit against the state of Kentucky, attempting to reaffirm its jurisdiction over prediction market platforms.

In the complaint submitted to the Eastern District Federal Court of Kentucky, the CFTC stated that Kentucky's attempt to shut down federally regulated designated contract markets interfered with the federal regulatory system established by Congress for the national swap market. It claimed to have "exclusive jurisdiction" over relevant event contracts and prediction market products.

Previously, Kentucky had sued platforms such as Kalshi and Polymarket, accusing them of operating unauthorized illegal sports betting and gambling businesses within the state. As of June, over 12 U.S. states including Kentucky and New York have taken legal action against Polymarket and Kalshi, accusing them of conducting illegal sports betting, with Kentucky becoming the ninth state sued by the CFTC in the dispute over prediction market regulation.

This action highlights the continuing escalation of the conflict between federal derivatives regulation and state-level gambling regulation.

There are two main reasons behind the disputes:

• First, there are the actual interests of state-level local gambling industries, such as tax revenue. Previously, traditional sports betting has brought substantial tax revenue to various regions (e.g., high tax rate online betting); if prediction markets fully replace the gambling industry, the potential tax loss for each state could reach hundreds of millions of dollars annually (some estimates around 600 million dollars).
• Second, there is the regulatory boundary definition between the gambling industry and prediction markets as an emerging industry. The CFTC aims to include "event contracts" within the realm of commodity derivatives, futures, or swaps, enforcing a policy of federal law supremacy.

The final specific outcome may rely on how state courts and even the federal Supreme Court interpret and judge the Commodity Exchange Act (CEA).

Moreover, the fires of conflict have also ignited between exchanges and the CFTC. Previously, the CFTC approved Kalshi's perpetual futures trading application, prompting the Chicago Mercantile Exchange (CME) to file a lawsuit against the former—

It is reported that CME has sued the U.S. Commodity Futures Trading Commission and its chairman Michael Selig in the Federal District Court for the District of Columbia. Regarding CFTC's actions on May 29 approving prediction market platform Kalshi to launch perpetual futures contracts tied to Bitcoin spot prices, the CFTC treated "futures" with expiration dates as "swaps," violating Congressional directives and the Commodity Exchange Act, and requested the court to revoke relevant perpetual futures actions. CME also stated that Selig acted unilaterally without a complete group of five commissioners.

A CFTC spokesperson stated that CME's actions against the agency and government crypto policies represent a "legal war," calling the lawsuit "extremely reckless." (It's as if they almost wanted to write "your case was initiated too hastily" on their forehead.)

Of course, one cannot blame CME for such an outburst, as the CFTC's move to allow Kalshi's crypto perpetual contract trading essentially allows Kalshi and other prediction market platforms to invade their "trading territory." As for the forces behind the scenes, it may also relate to the Trump family to some extent.

The Trump Family's "Bilateral Betting Method" in Prediction Markets: Donald Trump Jr. Bets on Kalshi and Polymarket

Recently, it was revealed that Kalshi is in discussions for a new funding round at an estimated valuation of about 40 billion dollars, with the deal possibly closing in Q3. After completing a 1 billion dollar financing in May (with investors including Sequoia Capital, Andreessen Horowitz, Coatue, and Morgan Stanley), Kalshi's valuation was raised from the previous 12 billion dollars to 22 billion dollars, and now this number is about to double.

Kalshi CEO Tarek Mansour stated that the company is considering an IPO no earlier than the end of 2027 or 2028. Kalshi officially reported that as of April 2026, its annual trading volume reached 178 billion dollars, a year-over-year increase of 32 times.

Such impressive market data and high enthusiasm from the capital market are difficult to dissociate from the involvement of one of the prominent figures from the Trump family, Donald Trump Jr.

It is known that Donald Trump Jr. is "eating from both sides" in the prediction market sector:

On one hand, he served as a paid strategic advisor at Kalshi at the beginning of 2025, through which he gained approximately 300,000 dollars worth of company equity when Kalshi's valuation was less than 2 billion dollars; this investment has already achieved over 10 times the return.

On the other hand, he is also an advisor at Polymarket and has made a strategic investment in the latter through his venture capital firm 1789 Capital, where he is a partner.

Additionally, Trump has previously emphasized multiple times the federal government's regulatory authority over prediction markets and even mentioned: "Kalshi and Polymarket will thrive under his leadership."

To some extent, the conflict of interests between capital and official regulatory agencies has been alleviated; the Trump family acts as the "best lubricant" in this contradictory situation.

Thus, a network of interests connecting the U.S. CFTC and other federal regulatory bodies, various U.S. states, and Trump family investment institutions is gradually taking shape.

As for the CFTC's investigation into Polymarket, it is perhaps just a necessary path to standardize the prediction market industry.

The "spring of wild growth" in prediction markets is about to come to an end, while the "summer of prosperity" belonging to the prediction market industry is slowly approaching.

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