Polymarket is currently facing legal challenges due to allegations of misleading marketing practices. As reported by the Wall Street Journal, the National Association of Consumer Advocates (NACA) has filed a lawsuit against the company in the Superior Court of the District of Columbia. The suit claims that Polymarket employed a 'pattern of flagrantly deceptive and unfair marketing' tactics aimed at encouraging American consumers, particularly college students, to gamble on its platforms without adequate disclosure of risks.
The NACA contends that Polymarket's marketing strategies included deceptive promotions and failures to disclose material connections, which they argue violate the District of Columbia Consumer Protection Procedures Act (CPPA). The lawsuit names Polymarket CEO Shayne Coplan and Chief Marketing Officer Matthew Modabber, citing their responsibilities over the company’s advertising practices.
In its allegations, the NACA highlights that Polymarket utilized paid endorsers, including college-aged individuals, to promote its services through covert marketing campaigns. The complaint states, 'Defendants have used deliberately secretive marketing campaigns to raise their brand’s profile through ads by paid endorsers that are disguised as organic content.' Influencers with substantial followings allegedly received significant payments to create posts about Polymarket without disclosing their financial ties to the company.
Modabber is specifically accused of disbursing at least $350,000 to various content creators over a year, including $6,000 paid to political activist Riley Gaines for promoting the launch of a DOGE job cut tracker to her audience of over 1 million on the platform X.
Additionally, the suit cites instances of fake wagers presented in videos created by Polymarket endorsers. An analysis indicated that 70% of 1,105 videos reviewed showed placed bets, with a total value of $1.9 million attributed to these fake wagers. The top ten creators reportedly earned around $900,000 showcasing these bets across their content, with some creators receiving between $2,000 and $3,000 monthly for their work.
Furthermore, the NACA raises concerns about the practice of 'clipping,' where short ad videos are circulated across social media to increase reach significantly. One example noted how a video initially attracting 151 views surged to 2.4 million after being shared widely through such a campaign.
On top of these methods, Polymarket is accused of targeting college students directly via marketing campaigns coordinated with CampusGTM, offering compensation for student engagement that ranged from $500 to $2,000. The lawsuit mentions collaborations with fraternities, including a case involving Columbia University's Sigma Phi Epsilon chapter, where members were invited to Polymarket's headquarters, given funds to use on the platform, and promised kickbacks for sign-ups. This chapter reportedly earned $30,510 in just two weeks, some of which was used for a party.
In its lawsuit, the NACA seeks a jury trial, aiming for a judgment that Polymarket's conduct violates the CPPA and requesting remedies including restitution and a permanent injunction against the company's alleged unlawful practices.
This legal action follows a difficult period for Polymarket, which saw a District Court reject its motion for a preliminary injunction against Michigan state officials. Judge Paul Maloney ruled that Polymarket could not demonstrate immediate irreparable harm from shutting down its sports event operations in the state.
Previously, Polymarket had taken legal action against Michigan Attorney General Dana Nessel, coinciding with a lawsuit involving another company, Kalshi. These developments come shortly after Polymarket had reopened its U.S. exchange for iOS users, following an earlier settlement with the Commodity Futures Trading Commission (CFTC) in 2022 that included a $1.4 million penalty for failing to register appropriately.
The company’s return to the U.S. market followed its acquisition of a derivatives exchange holding company in July 2025, valued at roughly $112 million.
