The New York City Council has initiated an inquiry into four prominent prediction market platforms: Polymarket, Kalshi, Coinbase, and Gemini Titan. This investigation focuses on their advertising strategies and the potential targeting of underage individuals, marking a new chapter in New York’s ongoing scrutiny of the industry.
On August 11, Council Speaker Julie Menin dispatched letters to the aforementioned companies, seeking clarification on their adherence to the city’s consumer protection regulations and whether their current practices sufficiently safeguard residents from misleading marketing tactics.
In her correspondence with Polymarket, which was reviewed by the Wall Street Journal, Menin requested information regarding the company’s promotional content and allegations of fabricated trades. She referenced reports suggesting that Polymarket collaborated with marketing agents and social media influencers to mislead young adults, possibly including minors, through deceptive advertising.
Menin expressed concern, stating, “Alarming reports suggest that Polymarket conspired with marketing agents and social media influencers to mislead young adults—and potentially minors—with false and unethical advertising.”
Both Polymarket and Kalshi expressed their willingness to cooperate with the Council, while Coinbase affirmed its compliance with relevant laws. Gemini Titan has yet to provide a comment.
The companies have been given a 14-day period to respond to the Council's inquiries.
In addition to user demographics, Menin’s letters pose over 60 questions regarding the platforms’ operations and marketing practices in New York. The Council is particularly interested in data from January 1, 2025, including user counts, age demographics, and financial outcomes for New York residents using these platforms.
The inquiry also seeks specifics on advertising strategies employed to reach New Yorkers, including payments made to social media influencers and the effectiveness of their marketing efforts in attracting younger audiences.
While the City Council lacks the authority to impose criminal charges, it can issue subpoenas and demand documentation from the companies.
Menin indicated that the Council is contemplating legislation to enhance enforcement, initiate public education campaigns, implement health measures, and possibly allocate or redirect public funds to address concerns surrounding prediction markets.
Furthermore, the Council plans to conduct public hearings to discuss the industry.
This investigation aligns with ongoing legal battles involving prediction markets in New York. Recently, Attorney General Letitia James filed a lawsuit against Kalshi, alleging that the platform operates an illegal and unlicensed gambling business within the state.
Kalshi contends that its event contracts are federally regulated derivatives under the Commodity Exchange Act, asserting that states cannot regulate or prohibit such exchanges due to the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC) over event contracts.
The situation intensified concurrently with the Council's inquiry, as the CFTC exercised emergency powers to mandate that Kalshi continue its operations in compliance with federal regulations, despite New York’s attempts to shut it down.
In a separate legal action, Kalshi and the CFTC have also filed a lawsuit against New York in federal court.
Unlike these legal disputes, the City Council's investigation emphasizes consumer protection and advertising practices rather than the classification of prediction markets as gambling or their jurisdictional status.