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1. Regulators and Courts Come for Polymarket After WSJ Investigation
The CFTC are now investigating Polymarket. Senators want a federal probe on top of it, and Polymarket are being sued over a covert influencer campaign built on fake winnings.
This follows a Wall Street Journal investigation showing that Polymarket ran a covert influencer campaign built on fake winnings.
WSJ reviewed 1,105 videos from ten creators tied to a Polymarket marketing contractor. Around 70% showed a bet, totalling roughly $1.9 million.
The catch? None of them were real.
118 of the videos showed creators "winning" almost $900,000. Had the bets been genuine, those same creators would have lost more than $166,000.
The fakes were staged on dummy sites built to look like Polymarket, designed to push viewers onto the real, offshore platform. The creators were mostly college-age, paid two to three thousand dollars a month, and told not to disclose the arrangement. One student posted a video of "winning" $100,000 on a bet that Trump would say the word "McDonald's" that month.
National Association of Consumer Advocates sued Polymarket over the campaign, alleging they deliberately targeted college students, a group with problem-gambling rates around twice that of adults. Polymarket say they are auditing their promotional content and have launched an internal investigation.
Kalshi are in talks to raise at a $40bn valuation, according to the FT. That is roughly double the $22bn they were valued at in May 2026, when they raised $1bn in a Series F.
It follows a record run. Kalshi did $17.91bn in notional volume in May 2026, their ninth straight monthly record, up 21% on April 2026.
And they are pulling away from Polymarket. Kalshi's open interest, the value of live contracts, now sits at $796m against Polymarket's $424m, the widest that gap has ever been.
A lot of this is the World Cup, though, with the fresh records directly linked to the tournament.
On Zuck’s request, an internal team at Meta are building a prediction market called ‘Arena’, which would be independent of Facebook and Instagram.
According to the New York Times:
“Users would not wager money, and the app would probably rely on a video-game-like points system instead, one person said, though the company had not ruled out the eventual use of real money betting.”
Meta aims to grow the app by leveraging its large social networking audiences and directing them towards using it.
🗞 General
ARK Invest Will Use Kalshi's Markets to Guide Their Investment Calls (Read more here)
Will Warsh Use Prediction Markets as a Research Tool in the Fed's Data Overhaul? (Read more here)
How Polymarket Traders Revolted Over One Silly Syllable (Read more here)
$3 Million Reportedly Stolen in Polymarket Hack (Read more here)
Prediction Markets Let You Bet on Anything. That's a Problem (Read more here)
Gen-Z Traders Go for Broke in American Dream Pursuit (Read more here)
Why Wall Street's Biggest Traders Are Abandoning Crypto for Prediction Markets (Read more here)
Kalshi Scores FIFA World Cup Spotlight as Trading Hits a Record (Read more here)
Rick Rubin Stars in a Polymarket Commercial (Read more here)
🤝 Announcements & Partnerships
DraftKings Launches Its Own Prediction Markets Exchange as Volume Tops $3B (Read more here)
Kalshi Partners With ADI Predictstreet to Expand World Cup Markets (Read more here)
Glimpse Debuts Bitcoin Prediction Market to Reward Accurate Price Forecasting (Read more here)
Chainlink Brings Samsung, Toyota and Sony Pricing On-Chain With APAC Equities Streams (Read more here)
💰 Funding and M&A
Polymarket Acquires Craft Agents, Some Team Members Joining (Read more here)
⚖️ Regulation & Legal
Illinois Sued Over Prediction Market Law Imposing New Taxes and Regulations (Read more here)
Kalshi Asks Court to Dismiss Tribal Challenge to Sports Prediction Markets (Read more here)
More Than Two Dozen Prediction Market Bills Reflect Congressional Attention, Not Agreement (Read more here)
CFTC Sues Kentucky, the Ninth State Pulled Into the Jurisdiction Fight (Read more here)
US Senators Push to End the CFTC's 'Assault' on State Oversight of Prediction Markets (Read more here)
Gensler and a CME Lawsuit Add to the Pushback Against Prediction Markets (Read more here)
Disclaimers
This newsletter is for informational purposes only and is not financial, business or legal advice. These are the author's thoughts & opinions and do not represent the opinions of any other person, business, entity or sponsor. Any companies, platforms, markets or projects mentioned are for illustrative purposes unless specified.
The contents of this newsletter should not be used in any public or private domain without the express permission of the author.
The contents of this newsletter should not be used for any commercial activity, for example - research report, consultancy activity, or paywalled article without the express permission of the author.
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It's crucial to provide our readers with clear information regarding the inherent nature of services and products that might be covered in this newsletter, including those advertised by our sponsors from time to time. When you trade on prediction markets (including event contracts, opinion markets and other speculative instruments) your capital is at risk. Risks associated with prediction markets include price volatility, loss of capital (the value of your position could drop to zero), illiquidity, complexity, evolving regulation and lack of protection. Many prediction market operators do not currently operate in a fully regulated industry, and availability varies by jurisdiction. Therefore, please be aware that when you place funds on prediction markets, you may not be protected under financial compensation schemes and protections typically afforded to investors when dealing with regulated and authorised entities to operate as financial services firm. Nothing in this newsletter constitutes a recommendation to place, hold, or close any position on any market.