The New York City Council has announced an investigation into four prediction markets following allegations of deceptive marketing practices. The companies under scrutiny include Gemini Titan, Kalshi, and Polymarket, which are based in New York, and Coinbase, located in Texas.
According to New York City Council Speaker Julie Menin, these markets lure consumers into betting on various events, covering sports, politics, culture, weather, and more. Menin expressed concern about the potential harm to New Yorkers, particularly the youth, from such practices.
Prediction markets aggressively entice consumers to bet and wager. We refuse to let New Yorkers, especially our young people, become collateral damage.
The investigation will look into the marketing strategies used by these platforms within New York. This move comes after a Wall Street Journal investigation in June revealed that Polymarket had compensated online creators for posting misleading videos regarding their trade earnings. In response, Polymarket pledged to audit its promotional materials.
On Monday, the City Council expanded its investigation to include allegations against Polymarket, such as accusations of targeting younger adults through false marketing. Polymarket expressed its willingness to cooperate with the investigation.
The other companies involved have yet to respond to inquiries about the investigation.
This local probe is part of a larger conflict between state and federal authorities over regulatory control of prediction markets. Several states, including New York, have initiated legal action against these platforms. The New York Attorney General, Letitia James, has accused Coinbase, Gemini Titan, and Kalshi of operating illegal gambling ventures that violate state laws.
At the federal level, the Commodity Futures Trading Commission (CFTC) has filed lawsuits challenging state attempts to impose stricter regulations on prediction markets. The CFTC claims that federal law grants it exclusive regulatory power over derivative markets. However, legal experts point out that it remains unclear whether this authority extends to sports betting, a major component of prediction market trades.