The U.S. Commodity Futures Trading Commission is investigating incentive programs used by prediction markets over concerns that promotional rewards may encourage misleading marketing, fictitious trading, fraud or market manipulation. CFTC Chairman Michael Selig has not decided whether the inquiry will lead to targeted reviews or formal enforcement investigations, but some action is expected by the end of the week. The investigation follows an Aug. 12 advisory opinion warning prediction markets about compliance risks in market-making, liquidity, trading and reward programs. Kalshi has moved to end its trading-volume incentive program, while Polymarket could face greater scrutiny because its rewards are deeply tied to liquidity and user growth. Data cited in the report shows Polymarket generated $229 million in trading fees after beginning to charge fees in January 2026, while distributing $128 million in rewards, equal to 54.3% of fees. Polymarket recorded $3.21 million in 24-hour fees but only about $400,000 in revenue, with the difference largely attributed to rewards for traders and market makers.