NYC Council Opens Probe Into Prediction Market Marketing Practices

The New York City Council has opened an investigation into the marketing practices of several major prediction market platforms, adding a new layer of regulatory scrutiny to an industry already facing legal challenges across the US.

Council Speaker Julie Menin sent letters on August 11 to Polymarket, Kalshi, Coinbase and Gemini Titan, asking the companies to provide information about their operations in New York and their compliance with consumer protection requirements.

The inquiry is particularly focused on whether prediction market companies and their marketing partners have used deceptive advertising or targeted young adults and potentially minors.

Focus on Influencer Marketing

Polymarket is facing particular scrutiny over its use of social media creators and influencers.

Menin's letter cited reports alleging that Polymarket worked with marketing agents and influencers to promote its platform to younger audiences through misleading advertising.

The Council is seeking information about Polymarket's promotional videos, social media activity and the use of content creators in its marketing campaigns. The allegations cited in the inquiry include undisclosed influencer payments, videos depicting simulated trades and promotional content that presented losing bets as winning outcomes.

The Council is also examining whether marketing campaigns encouraged users to trade based on purported insider information.

Polymarket said it looks forward to engaging with the Council, while Kalshi also indicated that it was willing to work with the city. Coinbase said it fully complies with applicable laws, while Gemini Titan had not immediately commented.

Council Seeks User and Financial Data

The investigation extends beyond advertising content.

Menin's letters contain more than 60 questions covering the companies' operations and marketing activity in New York. The Council is requesting information dating back to January 1, 2025, including the number of New York users, customer age and demographic information, and the amount residents have won or lost on the platforms.

The Council is also seeking details on spending on social media influencers and the effectiveness of those campaigns in attracting younger users.

The companies have been given 14 days to respond.

While the City Council cannot bring criminal charges against the platforms, it has subpoena powers and can require companies to produce documents. Menin has also indicated that the Council is considering potential legislation involving increased enforcement, public education, health measures and the allocation of public funds related to prediction markets. Public hearings on the industry are also expected.

Another Front in New York's Prediction Market Fight

The Council's investigation comes amid a broader dispute between New York officials and the prediction market industry.

New York Attorney General Letitia James sued Kalshi on July 31, alleging that the company operates an illegal and unlicensed gambling business in the state. Kalshi maintains that its event contracts are federally regulated derivatives and argues that the Commodity Futures Trading Commission has exclusive jurisdiction over the markets.

The CFTC has separately taken steps to defend Kalshi's continued operation under federal requirements, while Kalshi and the federal regulator have pursued litigation against New York over the state's attempts to restrict the platform.

The City Council's inquiry is distinct from that legal battle. Rather than primarily addressing whether prediction markets constitute gambling or fall under federal jurisdiction, the investigation is centered on consumer protection and advertising practices.

That distinction could prove significant as prediction markets continue to expand into sports and other traditionally gambling-oriented categories.

For Polymarket, Kalshi and their competitors, the investigation therefore represents another test of how the rapidly expanding prediction market model can operate alongside existing rules governing advertising, consumer protection and responsible participation.

The companies' responses to the Council's requests are expected to provide further insight into how prediction market platforms market themselves to New York consumers and the safeguards they have in place for younger audiences.