How Polymarket Made Fake Bets Go Viral

9:54Ryan Knutson:Makahara jumps out of his seat. In the video, it looks like he's just won$100 ,000. In reality, that Trump speech took place two months earlier, in November, not January. In dozens of the videos, the timeline of events was manipulated, showing creators reacting to things that actually happened weeks or months in the past. And they weren't actually making bets at all. They were just recreating the appearance of an instance in which somebody won. Yes. Yeah, that's right. It was all fake. Like, the whole thing looked very real, but no real money was ever placed on any of these bets. If you added up all the bets made in these videos, in this alternate reality, it looked like the users made more than$900 ,000 in total.

10:45Ryan Knutson:But in the real world, Caitlin and Catherine crunched the numbers. And if those users had actually made all of those bets, like that fake McDonald's one, they would have lost$166 ,000. So not only did they not win, they would have actually lost had they actually done the thing that they were showing. That's right. I mean, what were you thinking as you were making these discoveries?

11:07Katherine Long:Actually, I don't know what I was thinking. I was just kind of stunned. I was in disbelief. I was in shock. I was like, what a horrible time to live on social media. One thing I thought a lot about during this reporting was, is this just social media these days? Can I believe anything that I see online? Is it all just undisclosed advertisements at this point?

11:31Ryan Knutson:After discovering all this, Kaylin and Catherine started reaching out to the video creators themselves. After being contacted, some put Polymarket Partner in their posts. or they took them down. Some said they were paid about$2 ,000 to$3 ,000 a month for these posts. The users we mentioned, George Makahara and Haiyan Nguyen, both declined to comment. After Caitlin and Catherine reached out to Polymarket, that fake website, Poi Market, the one with an I instead of an L, was taken down. The company said in a statement that it was, quote, committed to maintaining accurate, fair, and transparent markets.

12:09Ryan Knutson:We are part of a rapidly growing industry and are constantly evaluating ways to improve how we're engaging and earning the trust of our audience. End quote. So why was Polymarket doing all of this? That's next.

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14:01Ryan Knutson:Polymarket is one of the world's largest prediction markets, worth about$14 billion. But in the past year, it's seen some fierce competition.

14:11Katherine Long:The two biggest prediction markets, Polymarket and Calci, are both in a head-to-head against each other. Interestingly, Polymarket, which started out sort of in the top spot, was overtaken by Calci when it comes to the volume traded on prediction markets last year. So Polymarket is maybe feeling a little bit of pressure. They're feeling threatened.

14:31Ryan Knutson:There's new competitors, too. Robinhood and FanDuel have also launched prediction markets. At the same time, Polymarket's main crypto-based platform has technically been banned from operating in the U.S. since 2022. Polymarket reincorporated that platform in Panama. The company recently released a separate U.S. app, but it has far fewer users than its main site.

14:53Katherine Long:In general, Polymarket is trying to grow as fast as possible, and it knows that it needs a constant stream of new users on the platform to make it profitable and fun for the existing users to trade.

15:10Ryan Knutson:To grow, Polymarket launched an aggressive marketing campaign. And a big part of that was those videos where creators made fake bets and won loads of fake money. But Caitlin and Catherine soon realized that Polymarket didn't stop there. There's actually a whole other layer to this story. How did you discover that this clipping stuff was going on?

15:32Katherine Long:We rabbit-holed. We love the internet.

15:38Ryan Knutson:The rabbit hole they went down was into a recent marketing phenomenon known as clipping.

15:43Katherine Long:The goal of clipping is to create this appearance of a groundswell of organic interest. in a product or a brand. It's this idea that, you know, all of a sudden, out of nowhere, people are talking about this phenomenon.

15:58Ryan Knutson:Catherine started looking around for websites that recruit clippers from around the world.

16:02Katherine Long:And almost immediately, I stumbled on a website that was recruiting clippers for Polymarket.

16:07Ryan Knutson:She discovered that Polymarket was working with a third-party marketing company called Virality. Virality paid a global army of contractors to clip and share the fake Polymarket videos. On their journey down the rabbit hole, Kaylin and Catherine made another discovery online.

16:25Katherine Long:And interestingly enough, a bunch of instructional materials for the clippers were just sitting there. Entirely out in the open.

16:32Ryan Knutson:Oh my God. So it was just sitting there. They hit a goldmine. They found a bunch of training materials where virality instructed its clippers on how to make fake accounts.

16:43Katherine Long:Here's how you warm it up. Here's how your profile should look. Here's how you make your videos seem organic and not like their brand promotional content.

16:52Ryan Knutson:The Clippers then reposted the fake Polymarket videos thousands of times, sometimes with new music or overlaid text. Virality declined to comment. In their digging, Catherine and Kalen also reviewed internal chat logs. They could see close to 20 ,000 messages between these Clippers and Virality, the marketing firm. And something became very clear. The campaign was aimed at Americans. According to these materials, Virality only paid Clippers if at least 60 % of their audience was in the U.S. And in the chat logs, they could see Clippers swapping tips on how to reach U.S. users. Like they would say, well, are you using a U.S.

17:34phone number? Can you get a U.S. SIM card? These are all of the ways in which you can try and make sure that your account is reaching a U.S. audience even though you are a teenager, sitting in Asia. And some of these people who were clippers would disclose that they were 14 years old and doing this.

17:53Katherine Long:Yeah, there were a bunch of messages that were in Tagalog. You know, there were a bunch of messages about being a student in India. So it was pretty clear from the message logs that the clippers were mostly teens. They were mostly living in Asia. They weren't getting paid very much. And they were all swapping tips on how to make it seem like they were in the U.S.

18:12Ryan Knutson:Turns out, paying a legion of teenagers in Asia to repost clips is effective marketing. On their own, the fake videos that Caitlin and Catherine reviewed got around 10 to 15 million views in total. With the clipping campaign, the videos racked up over 140 million views on TikTok, YouTube, and Instagram. That's according to the analytics provider Tubular. That's 10 times the original reach.

18:41Ryan Knutson:You might be wondering, aren't there laws against deceptive advertising? Yes, there are indeed. Federal law requires brands to be truthful about what they're promoting, although there is some gray area. Kaylin and Catherine reached out to the U.S. Commodity Futures Trading Commission, or CFTC. That's the federal body that regulates prediction markets and enacted that U.S. polymarket ban in the first place.

19:05Katherine Long:When we asked the CFTC about the findings in our story, They said that reporting like the journals was what made it more important for offshore prediction markets to come back to the United States where they could be more effectively regulated by the CFTC.

19:20Ryan Knutson:In other words, the CFTC is saying, like, well, they're kind of outside of our jurisdiction because they're not technically here.

19:25Katherine Long:Yeah, that's right. Subsequently, two senators called on the CFTC to investigate based on our reporting. And we also learned that the CFTC has an ongoing investigation into polymarket.

19:36Ryan Knutson:What about the Federal Trade Commission? Doesn't the Federal Trade Commission regulate advertising?

19:40Katherine Long:The Federal Trade Commission declined to comment, citing a policy of not commenting on potential investigations.

19:47Ryan Knutson:More broadly, the Trump administration has taken a relaxed approach to regulating prediction markets. Several states have tried to rein in those businesses, but the CFTC has sued to block those regulations. Trump recently called politicians who want the states to regulate these markets, quote, scum in a true social post. Trump's son, Don Jr., is an investor in Polymarket. A spokesperson for Don Jr. didn't respond to requests for comment. A White House spokesman said there are no conflicts of interest and that Trump acts in the best interests of the American public.

20:25Ryan Knutson:Are these ads at all in any way an illustration of the kind of money that people can make on Polymarket?

20:32Katherine Long:No, no. Most people lose money on Polymarket.

20:36Ryan Knutson:Who does win money on Polymarket?

20:38Katherine Long:Almost nobody. Previously, we reported that 70 % of Polymarket users lose money. That's based on Caitlin's incredible data analysis.

20:47Ryan Knutson:Caitlin found that about two-thirds of the profits on Polymarket go to 0.1 % of users. And those users tend to be small hedge funds and trading firms that are informed by reams of data. Meanwhile, the average bettor who's losing money looks a lot like the people in those fake videos. The primary audience for people to gamble, whether it's sports betting or prediction markets, is young men. As Kaitlin and Catherine were wrapping up their reporting, they started noticing a lot of new Polymarket videos about the World Cup. Like the other videos, they also showed trading on what appears to be a fake version of Polymarket.

21:26Katherine Long:Wait, what? 2026 FIFA World Cup winner. If I scroll all the way down, how does Saudi Arabia only have a 0.1 % chance? Bro, they literally have Ronaldo.

21:36Ryan Knutson:The young man types in a$1 ,000 bet. It showed a potential payout of a million dollars. But Cristiano Ronaldo actually plays for Portugal in the World Cup. Saudi Arabia was knocked out in the first round. That video is still up.

22:15Ryan Knutson:That's all for today. Monday, July 6th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Neil Mehta and Brenna Smith.

22:30Ryan Knutson:Thanks for listening. See you tomorrow.