The New York City Council has launched an investigation into the marketing and advertising practices of prediction market platforms, including Kalshi, Polymarket, Coinbase and Gemini Titan, amid concerns about potentially deceptive tactics and the targeting of young people.
Council Speaker Julie Menin sent letters to the four companies seeking information on their marketing practices and reach among New Yorkers, including revenue generated in the city, the number of local users and compliance with consumer protection laws. The letters contain more than 60 questions, according to local media reports.
“Prediction markets aggressively entice consumers to bet and wager on sports, politics, culture, weather, and pretty much anything,” Menin said.
“We refuse to let New Yorkers, especially our young people, become collateral damage,” she said, adding that she intended to use the Council’s authority to protect consumers from deceptive and predatory marketing.
The inquiry will examine whether prediction market platforms have used false, deceptive or abusive marketing, with particular attention to young people, minors and consumers vulnerable to compulsive wagering.
The Council is also considering whether additional legislation, enforcement measures, public education campaigns, health measures or funding are needed to address potential risks associated with the industry. Public hearings are planned as part of the investigation.
The Council’s inquiry includes allegations involving Polymarket influencer marketing, including undisclosed promotions, videos showing trades on dummy websites designed to resemble the platform, fictitious depictions of profitable wagers that would have resulted in losses, and promotion of insider trading.
Menin cited a June Wall Street Journal report that examined more than 1,100 videos produced by Polymarket creators. The report found that 70% featured dummy sites that Polymarket used to film fake trades, according to the Council.
According to the New York Post, Polymarket said it “looks forward to engaging with the City Council,” while a Coinbase spokeswoman said the company “fully complies with applicable laws.”
The Council does not have the power to bring criminal charges but can issue subpoenas requiring companies to produce documents.
“Online prediction markets are surging in popularity, with some projecting $300 billion in volume on the platforms this year,” said Council Member Harvey Epstein, chair of the Committee on Consumer and Worker Protection.
“We have a responsibility to investigate their claims and the advertising tactics these companies are using to ensure they are following the law,” Epstein said.
The investigation comes shortly after New York Attorney General Letitia James sued Kalshi, alleging that the company is illegally operating a gambling app. Kalshi and other prediction market operators have argued that their businesses differ from sports gambling because users trade against one another rather than against the house.
The Commodity Futures Trading Commission, which maintains that it has authority over national derivatives markets, has pushed back against James’ lawsuit.
“The New York State Attorney General does not set the rules for national derivatives markets,” CFTC spokeswoman Brooke Nethercott said. “That’s the Congressionally mandated role of the CFTC.”
The CFTC has directed Kalshi to continue operating in accordance with the Commodity Exchange Act’s core principles while the dispute proceeds.
Kalshi has previously offered New York authorities a share of its trading revenue through taxes and proposed allowing users to exclude themselves from its app, the Wall Street Journal previously reported.
Polymarket has also begun reorganizing its marketing operation, including hiring Bird founder Travis VanderZanden as head of growth.
Deputy Speaker Dr. Nantasha Williams said the Council needed to examine potential harms associated with prediction markets, particularly those involving young people and compulsive wagering.
“We also have to recognize the potential harms associated with these platforms, particularly when it comes to young people, compulsive wagering, and how these products are marketed to consumers,” Williams said.
Council Member Shekar Krishnan, chair of the Committee on Oversight and Investigations, accused prediction market platforms of targeting young adults and minors with deceptive marketing.
“Apps like Polymarket are expanding rapidly unchecked,” Krishnan said.
The Council said the investigation would help determine whether existing consumer protections are sufficient, noting that prediction markets are not currently subject to some of the marketing restrictions and consumer safeguards that apply to casinos and online sports betting.