Prediction Markets Face NYC Probe Over Marketing Practices

The New York City Council launched an investigation into four prediction markets, The Wall Street Journal (WSJ) reported Wednesday (Aug. 12).

The probe centers on the companies’ alleged use of deceptive marketing practices and their targeting of minors, according to the report. City Council Speaker Julie Menin sent letters to Polymarket, Kalshi, Coinbase and Gemini Titan asking about how the platforms comply with consumer protection laws. All four prediction markets have a presence in New York City.

Menin’s letter to Polymarket asked for details about promotional videos that appeared to depict fake trades, the report said.

“[T]roubling news reports allege that Polymarket conspired with marketing agents and social media influencers to target young adults—and thus potentially minors—with false, deceptive and unconscionable advertising,” Menin wrote, per the report.

In June, the WSJ’s analysis of more than 1,100 videos made by Polymarket creators found that 70% featured phony sites the company used to film fake trades, according to the report.

Spokespeople for Polymarket and Kalshi said, per the report, that the companies look forward to engaging with the city council, while a Coinbase spokesperson said the company “fully complies with applicable laws.”

Gemini did not respond to the WSJ’s or PYMNTS’ request for comment.

In response to the WSJ’s June report, Polymarket said it is “committed to maintaining accurate, fair and transparent markets” and that it would audit its promotional content.

Two weeks ago, New York State filed a lawsuit against Kalshi, which claims the company operates an illegal gambling platform and seeks damages of up to $36 billion.

“Kalshi has chosen to ignore New York’s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules,” New York Gov. Kathy Hochul said in a joint statement issued by Attorney General Letitia James’ office. “This choice has consequences, and working closely with Attorney General James, New York is taking action to stop this illegal behavior and bring Kalshi into compliance because no company is above the law.”

New York-based Kalshi said it had expected the action and filed a petition aiming to have the case shifted to federal court soon after James’ filing, calling the lawsuit “political theater from the leadership in our own state.”