NYC Council Opens Probe Into Prediction Market Marketing Practices
Key Takeaways
- •The New York City Council is probing Kalshi, Polymarket, Coinbase, and Gemini Titan for potentially using deceptive influencer marketing to attract young adults and minors.
- •The investigation could result in new legislation, public education efforts, or enforcement measures depending on its findings.
- •The inquiry occurs amid a broader legal dispute between state gaming regulators and the CFTC over jurisdictional authority over prediction market products.
- •Polymarket previously paid a $1.4 million CFTC settlement in 2022 for offering unregistered swaps and later restricted access for US users.
- •Coinbase stated it fully complies with applicable laws, while Polymarket expressed willingness to engage with the council on the matter.
The New York City Council has launched an investigation into companies offering prediction market services, seeking to determine whether they used “false and deceptive marketing” through influencers to target young adults.
Prediction markets — platforms that let users trade contracts on the outcome of real-world events, from elections to sports to cryptocurrency price milestones — have grown rapidly in visibility, attracting millions in trading volume during the 2024 US election cycle. Kalshi operates as a CFTC-regulated designated contract market, while Polymarket reached a $1.4 million settlement with the CFTC in 2022 over charges of offering unregistered swaps and subsequently restricted US user access.
In a Wednesday notice, the council said Speaker Julie Menin sent letters to Kalshi, Polymarket, Coinbase and Gemini Titan as part of a probe into what it described as “abusive marketing” tied to the platforms’ prediction market services. The investigation will consider whether New York City officials need to pursue additional measures against such practices, including legislation, education and enforcement.
“Apps like Polymarket are expanding rapidly unchecked,” said Council Member Shekar Krishnan, who chairs the committee on oversight and investigations. “Their unprecedented reach is because they are preying on young adults and minors with deceptive and sometimes outright false marketing tactics that pull them in and wring them dry.”
The New York City investigation comes amid an emerging legal battle between US state and federal regulators over prediction market products, including contracts linked to sporting events. State gaming authorities in several jurisdictions argue that some companies are illegally offering sports betting, while the Commodity Futures Trading Commission (CFTC) maintains that the trades qualify as “swaps” under its authority as a commodities regulator.
Cointelegraph reached out to Gemini for comment on the investigation but did not receive an immediate response. A Coinbase spokesperson said the company “offers [its] customers access to federally regulated prediction markets overseen by the [Commodity Futures Trading Commission], and fully complies with applicable laws,” while a Polymarket spokesperson said the company “look[s] forward to engaging with The New York City Council on this matter.”
Related: Judge stays CFTC’s case against US soldier over prediction market bets
