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.
A spokesperson for the New York City Council said the companies were selected based on public reports and other information it has examined as part of its ongoing investigation into the prediction market industry. The council also considered how much of the companies' marketing reaches New York City residents, the spokesperson said.
The inquiry could be expanded to include more platforms, the spokesperson added.
Polymarket allegations
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.
"The Council is investigating allegations involving Polymarket and, critically, the extent to which similar marketing practices are prevalent within the prediction market industry more broadly, and related social harms to City residents," Menin said in a letter addressed to Polymarket founder and Chief Executive Shayne Coplan that was shared with CBS News.
Menin, a city council member who represents the Upper East Side, said the ultimate goal of the investigation is to determine whether more legislation, enforcement and education are necessary to combat "abusive marketing" in New York City.
"We look forward to engaging with the New York City Council on this matter," Polymarket said in a statement.
A Coinbase spokesperson said in an email that the company "offers our customers access to federally regulated prediction markets overseen by the CFTC, and fully complies with applicable laws."
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.
The city council's investigation that was announced Wednesday doesn't focus on whether prediction markets' practices violate state gambling laws, according to Menin's letter to Polymarket.
