New York City Council opens probe into prediction market marketing practices

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NYC Council probes prediction markets

Highlights

New York City Council sent inquiry letters to Kalshi, Polymarket, Coinbase, and Gemini Titan over alleged false or abusive marketing in the prediction market industry.
New York's Attorney General sued Kalshi last month alleging illegal gambling, seeking at least $36 billion in penalties, restitution, and disgorgement.
The Commodity Futures Trading Commission used emergency authority to let Kalshi operate despite state lawsuits, deepening regulatory conflicts over prediction market jurisdiction.

Council inquiry targets platform marketing

According to The Block, the New York City Council said in a statement on Wednesday that it has sent letters to Kalshi, Polymarket, Coinbase and Gemini Titan as part of a probe into alleged false, deceptive or abusive marketing tactics.

The council said it has spent months looking into allegations of predatory marketing practices tied to the prediction market industry, which has expanded rapidly in New York City. It is also examining claims that Polymarket paid social media creators to record fake bets and winnings on replica versions of the site, an allegation reported by The Wall Street Journal in June.

Kalshi, Coinbase and Gemini Titan did not immediately respond to requests for comment. A Polymarket spokesperson said the company looks forward to engaging with the New York City Council.

Regulatory conflict deepens in New York

Concerns over prediction markets are rising across the U.S., particularly around sports-related contracts that some states argue amount to gambling and violate local gaming laws. Insider trading risks have also drawn attention, and in April New York Governor Kathy Hochul signed an executive order barring state employees from using confidential government information to bet on prediction markets.

The city probe comes a day after the Commodity Futures Trading Commission uses its emergency authority to allow Kalshi to keep operating, even after New York state sued the company last month. New York Attorney General Letitia James alleges Kalshi is running an illegal gambling business and seeks a temporary restraining order, user restitution, disgorgement of profits and civil penalties that could total at least $36 billion.

The CFTC argues it has exclusive jurisdiction over prediction markets, including sports-related contracts, and has sued several states as federal and state regulators dispute how the sector should be overseen. On Wednesday, Council Member Harvey Epstein said legislation to protect consumers is a possibility as lawmakers investigate whether the companies' advertising practices comply with the law.

Our earlier coverage of the New York City Council’s investigation into prediction market platforms outlined allegations that Polymarket, Kalshi, Coinbase and Gemini Titan used deceptive, youth-targeted promotions, including undisclosed influencer marketing and staged “winning” bet content. We also noted how the probe adds to broader legal pressure in New York, where state authorities have challenged Kalshi under gambling laws even as the CFTC asserts federal oversight of these markets.

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