New York City Council Launches Investigation Into Prediction Market Platforms' Marketing

The New York City Council announced an investigation into the marketing strategies of prediction market platforms. Council Speaker Julie Menin's office said on Wednesday that it had sent letters to four prediction market platforms -- Polymarket, Kalshi, Coinbase and Gemini Titan -- stating that the Council had spent months reviewing allegations of "false, deceptive, unfair and objectionable marketing practices" by event contract exchanges. Menin said in a statement that prediction markets actively induce consumers to place bets on a range of events, including sports, politics, culture and weather, and that she intends to use the Council's full powers to protect New Yorkers from the platforms' deceptive and predatory marketing practices.

In her letters, Menin cited a Wall Street Journal investigation that found Polymarket had run misleading marketing campaigns. The Journal reported in June that Polymarket made its partner content creators appear to be profitable on the platform when in fact they were not using their own funds. The report prompted an investigation by the U. S. Commodity Futures Trading Commission (CFTC). Polymarket has taken steps to adjust its marketing strategy, including updating and simplifying guidelines for its employees and partner content creators.

Menin said in the letters that the Council is investigating whether other prediction market companies use similar advertising strategies. A memorandum accompanying the letters noted that the allegations against Polymarket underscored an urgent need to determine whether legislative or other policy changes are necessary. Menin's office added that the Council plans to hold hearings on the matter. The memorandum made clear that the investigation does not address whether event contract exchanges violate New York State gambling laws.

New York State is currently suing Kalshi, Coinbase and Gemini, alleging they operate illegal gambling businesses. The platforms say they are federally regulated financial exchanges and are not subject to state gaming laws. New York State has not filed a lawsuit against Polymarket. Kalshi, Polymarket and Gemini are all headquartered in New York City. Coinbase is headquartered in Texas, but the company previously announced plans to expand its New York workforce to more than 1,000 people this year.

A Polymarket spokesperson said the company looks forward to communicating with the New York City Council on the matter. A Coinbase spokesperson said the company provides its customers with federally regulated prediction markets overseen by the CFTC and fully complies with applicable laws. Kalshi and Gemini did not immediately respond to requests for comment.