The New York City Council is probing the advertising practices of four major prediction market platforms, creating a new front in the legal battles facing the booming industry.
New York City Council Speaker Julie Menin sent a lengthy list of questions to Polymarket, Kalshi, Coinbase Global Inc. and Gemini Space Station Inc.’s prediction market platform, Titan, as part of a so-called legislative inquiry examining whether current city laws adequately protect residents from false or deceptive marketing from the new platforms.
The council is also looking at creating policies to address products offered to people who might “engage in compulsive wagering on event contracts.”
“The Council is investigating allegations involving Polymarket and, critically, the extent to which similar marketing practices are prevalent within the prediction market industry more broadly, and related social harms to City residents,” the letter to Polymarket said.
“We look forward to engaging with The New York City Council on this matter,” a spokesperson for Polymarket said.
The other firms didn’t immediately respond to requests for comment.
The inquiries come as prediction markets have grown into a multi-billion dollar industry by offering financial contracts tied to everything from celebrity news to when the Strait of Hormuz will reopen. Wagers on sports dominate prediction market trades and stand at the center of a wide-ranging fight over how to regulate the industry.
The platforms and the Commodity Futures Trading Commission, the federal regulator that oversees derivatives trading, have argued that event contracts are financial instruments that are fundamentally different from gambling and should fall under federal oversight. States, including New York, have disputed that idea and sued the firms, alleging the platforms amount to illegal, unlicensed gambling operations.
The CFTC on Tuesday ordered Kalshi to continue operating in New York despite the state’s effort to shut down its operations.
The CFTC is conducting its own investigation of Polymarket, looking at the firm’s social media activity and other issues, Bloomberg has reported. The Wall Street Journal reported in June that the company hired dozens of mostly college-aged social media creators to film themselves making fake profitable trades that were used to attract users to the platform.
The New York City Council letter references “troubling” news reports alleging Polymarket conspired with influencers and marketing agents to “target young adults — and thus potentially minors — with false, deceptive, and unconscionable advertising.”
The platforms are being asked to provide information going back to Jan. 1, 2025 on the number of users in the state, the age and demographics of customers and how much money New York City residents have won or lost. Other questions focus on how the firms advertise to New Yorkers, how much they pay influencers and how effective their marketing has been in capturing younger users.
The firms were given 14 days to respond. The council said it also plans to hold public hearings on the topic.