The New York City Council has launched an investigation into several major prediction-market platforms, including Polymarket and Kalshi, over allegations of deceptive marketing practices and concerns that some promotional material may have targeted minors.
City Council Speaker Julie Menin sent investigative letters to Polymarket, Kalshi, Coinbase and Gemini Titan, demanding information about their advertising practices and compliance with consumer-protection laws.
In a letter to Polymarket, Menin raised questions about promotional videos that she said featured simulated trades and social-media content that appeared to promote insider trading. She also questioned whether some advertising was directed toward underage users.
The scrutiny follows a Wall Street Journal investigation in June that reviewed more than 1,100 videos produced by content creators linked to Polymarket. According to the report, roughly 70% of the videos included dummy websites that were used to depict trades that did not actually take place.
The City Council sent the companies more than 60 questions covering their revenues generated in New York, the number of New York City users on their platforms and details about their marketing operations. The companies were given 14 days to respond.
While the City Council does not have the authority to bring criminal charges, it can issue subpoenas compelling companies to produce documents. Council members are also considering legislation that would strengthen oversight and enforcement involving prediction markets and are planning public hearings on the industry.
The investigation comes amid an escalating legal battle over whether prediction markets should be regulated as gambling operations by individual states or as federally regulated financial markets.
New York Attorney General Letitia James recently sued Kalshi, alleging that the company is operating an illegal gambling platform. Kalshi disputes that characterization, arguing that its users trade contracts against one another rather than wagering against a traditional sportsbook or “house,” making its platform more comparable to an exchange.
The dispute has also drawn in the Commodity Futures Trading Commission, which regulates derivatives markets at the federal level. The CFTC has asserted its authority over Kalshi under the Commodity Exchange Act, intensifying the conflict between federal regulators and New York officials.
New York Gov. Kathy Hochul has also criticized prediction markets, particularly contracts tied to medical developments and clinical trials, arguing that such markets can turn serious health outcomes into wagers.
Kalshi pushed back strongly against Hochul’s characterization, calling her claims “an outright lie.”
Prediction markets have rapidly expanded in popularity, allowing users to trade contracts based on the outcomes of elections, sporting events, economic developments, medical research and other real-world events.
Their growth has triggered an increasingly consequential regulatory fight over whether the platforms should fall primarily under state gambling laws or federal financial-market regulations — a dispute that could ultimately determine the future of the prediction-market industry in the United States.
(YWN World Headquarters – NYC)
