Polymarket Hit With Lawsuit Over Alleged Deceptive Marketing Practices

Prediction market platform Polymarket is facing a new legal challenge after the National Association of Consumer Advocates (NACA) filed a lawsuit accusing the company of deceptive marketing practices aimed at attracting American users.

Filed in the Superior Court of the District of Columbia, the complaint alleges that Polymarket used undisclosed paid influencers, misleading promotional tactics, and campus marketing campaigns to encourage consumers to risk money on its platform. The lawsuit also names Polymarket CEO Shayne Coplan and Chief Marketing Officer Matthew Modabber as defendants, alleging they had ultimate authority over the company's marketing strategy.

Polymarket has not publicly responded to the allegations. SBC Americas said it reached out to the company for comment but had not received a response at the time of publication.

Lawsuit Alleges Hidden Influencer Marketing

At the center of the lawsuit are claims that Polymarket paid social media creators to promote its platform without properly disclosing that the content was sponsored.

According to the complaint, the company worked with influencers who collectively reached hundreds of thousands of followers while presenting promotional content as organic posts. NACA alleges that individual creators received thousands of dollars to publish content about Polymarket without clearly identifying their relationship with the company.

The lawsuit claims Modabber used a personal PayPal account to distribute at least $350,000 to content creators over a 13-month period. Among those mentioned in the filing is political activist Riley Gaines, who allegedly received at least $6,000 to promote Polymarket's DOGE government spending tracker on X.

NACA also alleges that some creators were provided with simulated wagers to display in videos rather than placing their own money on the platform.

According to figures cited in the complaint, investigators reviewed 1,105 videos from 10 creators, finding that roughly 70% featured wagers with a combined on-screen value of approximately $1.9 million. The lawsuit further alleges that the creators collectively received around $900,000 in payments connected to 118 promotional videos, while some influencers reportedly earned between $2,000 and $3,000 per month for producing Polymarket-related content.

College Marketing Campaigns Also Under Scrutiny

The lawsuit also accuses Polymarket of targeting college-aged consumers through campus ambassador programs and fraternity partnerships.

According to the complaint, the company worked with CampusGTM to recruit student marketers, paying participants between $500 and $2,000 per campaign to promote the platform on college campuses.

NACA also alleges that Polymarket partnered with fraternities to encourage sign-ups through referral incentives. One example cited in the lawsuit involves Columbia University's Sigma Phi Epsilon chapter, whose members reportedly visited Polymarket's New York headquarters before launching a referral campaign that allegedly generated more than $30,000 for the fraternity in just two weeks.

The consumer advocacy group argues that these campaigns violated the District of Columbia's Consumer Protection Procedures Act by using deceptive marketing techniques and failing to disclose material relationships between the company and its promoters.

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Another Legal Challenge for Polymarket

The lawsuit adds to what has been a difficult stretch for Polymarket as it continues expanding its presence in the United States.

Earlier this month, a federal judge denied the company's request for a preliminary injunction against Michigan officials, allowing the state's efforts to restrict Polymarket's sports event contracts to continue while litigation moves forward.

The company only recently reentered the U.S. market after acquiring the holding company behind derivatives exchange QXC in 2025. That acquisition followed Polymarket's 2022 settlement with the Commodity Futures Trading Commission, which included a $1.4 million civil penalty over allegations that it operated without the required federal registrations.

NACA is seeking a jury trial and is asking the court to declare that Polymarket violated the District of Columbia's consumer protection law. The organization is also requesting restitution, disgorgement of profits, and a permanent injunction preventing the company from engaging in the marketing practices described in the complaint.

The case marks another significant legal test for Polymarket as the prediction market industry continues to face growing scrutiny from regulators, consumer advocates, and state governments across the United States.

Stay tuned to UMG Gaming for more updates on prediction markets, institutional adoption, and the latest developments shaping the future of event-based trading.