New York City Council probing Kalshi, Polymarket and other prediction markets over marketing claims

The New York City Council said Wednesday that it is investigating four prediction markets over allegations that the companies engage in deceptive marketing.

The probe will examine the advertising practices of Gemini Titan, Kalshi and Polymarket, all of which are based in New York, as well as Texas-based Coinbase.

“Prediction markets aggressively entice consumers to bet and wager on sports, politics, culture, weather and pretty much anything,” New York City Council Speaker Julie Menin said in a statement. “We refuse to let New Yorkers, especially our young people, become collateral damage.”

As part of the investigation, Menin has requested information from the platforms about their marketing practices in New York. 

Prediction markets allow users to wager on sports, political elections and many other events. 

The probe comes after a June investigation by the Wall Street Journal uncovered that Polymarket paid online content creators to post videos that misrepresented their earnings from trades. In response, the platform said it would conduct an audit of its promotional content.

On Monday, the New York City Council said it would also investigate these allegations against Polymarket, including claims that the company targets younger adults using false and deceptive marketing.

“We look forward to engaging with the New York City Council on this matter,” Polymarket said in a statement. 

The other companies subject to the investigation didn’t immediately respond to a request for comment. 

New York City’s probe highlights the broader turf battle between states and the federal government over who should have regulatory control over prediction markets. Multiple states have filed lawsuits against the platforms, including New York, where Attorney General Letitia James has sued Coinbase, Gemini Titan and Kalshi, accusing them of running illegal gambling operations that flout state laws. 

The Commodity Futures Trading Commission, the federal agency that oversees prediction markets, has filed lawsuits seeking to block states from tightening rules governing them. The agency argues that Congress gives it exclusive jurisdiction over the regulation of derivative markets. 

Yet attorneys note that it remains legally murky whether the CFTC’s jurisdiction extends to sports betting, which drives much of the trading volume on prediction markets.