The New York City Council has launched an investigation into four major prediction market platforms—Kalshi, Polymarket, Coinbase, and Gemini Titan—alleging they employ false, deceptive, or abusive marketing tactics, particularly targeting young users.
On Wednesday, City Council Speaker Julie Menin sent letters to the companies requesting detailed information about their advertising practices in New York. The probe follows reports that Polymarket used misleading promotions, including partnerships with social media influencers who misrepresented their earnings, according to a June Wall Street Journal investigation.
Key Developments
- The council’s inquiry will examine whether additional consumer protections are needed for prediction market users, including potential legislative action, public education campaigns, or funding initiatives.
- Menin stated in a statement that the council intends to use its "full power" to protect New Yorkers from what she described as predatory marketing practices in the industry.
- The investigation coincides with a broader regulatory turf battle between states and federal agencies over oversight of prediction markets.
Scope of the Investigation
The council’s probe focuses on whether the companies’ marketing strategies violate existing consumer protection laws or require new regulations. Menin’s letters cited concerns that prediction markets—where users wager on events such as sports, elections, or weather—lack the same restrictions as casinos or online sports betting platforms.
A memo from Menin’s office referenced the Wall Street Journal’s report, which alleged that Polymarket paid influencers to create videos suggesting they were profiting from trades when, in fact, the bets were not real. In response, Polymarket stated it would conduct an audit of its promotional content and expressed willingness to cooperate with the council’s inquiry.
Regulatory and Legal Context
The investigation follows multiple lawsuits filed by New York Attorney General Letitia James, who has accused Coinbase, Gemini Titan, and Kalshi of operating illegal gambling platforms. The Commodity Futures Trading Commission (CFTC), the federal regulator for prediction markets, has also launched an investigation into Polymarket’s marketing practices.
Polymarket has since taken steps to revise its marketing guidelines, including stricter rules for content creators and internal staff, according to reporting by CNBC. The company has not yet publicly addressed the council’s specific allegations.
The council plans to hold a public hearing as part of its inquiry, though it does not have the authority to bring criminal charges. Any potential legislative or regulatory changes would require further action by state or federal bodies.
Industry Response
While Polymarket has issued a statement expressing openness to engagement, the other three companies—Kalshi, Coinbase, and Gemini Titan—have not yet responded to requests for comment. The investigation raises questions about the future regulation of prediction markets, which operate in a legal gray area compared to traditional gambling platforms.
Background: What Are Prediction Markets?
Prediction markets allow users to trade contracts based on the outcome of future events, such as elections, sports games, or weather patterns. Unlike traditional sports betting, these platforms often frame their services as informational tools rather than gambling, though critics argue they function similarly.
The industry has grown rapidly in recent years, with platforms like Polymarket and Kalshi gaining significant user bases. However, concerns about underage exposure, misleading advertising, and lack of oversight have prompted increased scrutiny from regulators and lawmakers.