Polymarket is facing legal troubles due to claims of misleading marketing practices. The National Association of Consumer Advocates (NACA) has filed a lawsuit in the Superior Court of the District of Columbia, alleging that Polymarket engaged in a 'pattern of flagrantly deceptive and unfair marketing' aimed at persuading American consumers to risk their money on its platform. The lawsuit also alleges a failure to disclose material connections and unfair promotions directed at college students.
The NACA argues that Polymarket's practices violate the District of Columbia Consumer Protection Procedures Act (CPPA). Notably, the lawsuit names Polymarket CEO Shayne Coplan and Chief Marketing Officer Matthew Modabber, asserting that they hold 'ultimate decision-making authority' over the company's marketing strategies.
The NACA's lawsuit claims that Polymarket used paid endorsers, some of whom were college-aged, to deceptively market its offerings. 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.' It further alleges that influencers with large followings were not transparent about their financial ties to Polymarket.
Modabber reportedly used his personal PayPal account to send at least $350,000 to content creators over a period of 13 months. Among them was political activist Riley Gaines, who allegedly received $6,000 for promoting Polymarket’s launch of a DOGE job cut tracker to her more than 1 million followers on X, without disclosing her association with the platform.
The complaint also discusses how Polymarket allegedly allocated fake wagers to content creators. A review highlighted in a Wall Street Journal report examined 1,105 videos from various creators, discovering that 70% displayed a wager. These fake bets totaled around $1.9 million, with the creators earning approximately $900,000 from 118 videos. Additionally, one in four of these videos featured the term 'free,' and some creators were allegedly compensated $2,000 to $3,000 per month.
Concerns extend to Polymarket's grassroots marketing efforts, with claims that the company targeted college campuses directly. The lawsuit cites a partnership with CampusGTM, which facilitated campaigns at various colleges, compensating students between $500 and $2,000 per campaign. Allegations also include collaborations with fraternities, such as Columbia University’s Sigma Phi Epsilon chapter, where members were offered $10 to try the platform and kickbacks for sign-ups. Two weeks after launching the sign-up deal, Sigma Phi Epsilon reportedly earned $30,510, some of which funded a party.
In its complaint, the NACA is demanding a jury trial and a declaratory judgment to affirm that Polymarket's actions violate the CPPA. The organization is also seeking equitable relief, including restitution, disgorgement of profits, and an injunction against the company's alleged unlawful practices.
This lawsuit adds to Polymarket's challenges, as the company recently faced a setback in a District Court after a judge denied its request for a preliminary injunction against state officials in Michigan. The ruling indicated that Polymarket could not demonstrate immediate irreparable harm from the shutdown of its sports event contract operations in the state.
Earlier, Polymarket preemptively sued Michigan Attorney General Dana Nessel and other officials in response to a lawsuit against Kalshi. The NACA’s legal action follows closely behind Polymarket’s reopening of its U.S. exchange to iOS users after a waitlist phase, less than two months after it settled with the Commodity Futures Trading Commission (CFTC) by paying a $1.4 million civil penalty for failing to register as a designated contract market or swap execution facility. Polymarket’s re-entry into the U.S. market was made possible by its July 2025 acquisition of the holding company of derivatives exchange QXC and its associated clearinghouse, valued at approximately $112 million.
