New York City Council Investigates Prediction Markets

The New York City Council is investigating four prediction markets accused of deceptive marketing practices. The platforms involved include New York-based Gemini Titan, Kalshi, and Polymarket, as well as Texas-based Coinbase.

New York City Council Speaker Julie Menin expressed concern about the impact on consumers, particularly young people. Menin stated, “We refuse to let New Yorkers, especially our young people, become collateral damage.” The investigation will scrutinize advertising tactics used by these companies.

Prediction markets allow users to wager on various events such as sports and political elections. The probe was initiated following a Wall Street Journal investigation in June, which revealed that Polymarket had paid content creators to post misleading videos about their trading profits. In response, Polymarket has pledged to audit its promotional content.

On Monday, the City Council added these allegations against Polymarket to its investigation, focusing on claims of deceptive marketing targeted at younger adults. Polymarket expressed willingness to cooperate with the Council: “We look forward to engaging with the New York City Council on this matter.” The other companies have not yet commented.

This investigation underscores the conflict over who should regulate prediction markets, with states like New York filing lawsuits against these platforms for alleged illegal gambling operations. Meanwhile, the Commodity Futures Trading Commission (CFTC), a federal agency, argues that it has sole jurisdiction over derivative markets regulation and has challenged state attempts to impose stricter rules. However, legal experts note uncertainty over whether the CFTC’s authority covers sports betting, a major component of prediction market activity.