New York City Council probes Polymarket and Kalshi for potential predatory marketing practices targeting young consumers.
The New York City Council has launched an investigation focusing on the marketing strategies of prediction market operators, including Polymarket and Kalshi, along with their affiliations to Coinbase and Gemini Titan.
Council members expressed concern over potentially deceptive advertising, undisclosed payments to influencers, and the marketing of betting products to younger audiences, possibly minors.
This inquiry was initiated following reports of promotional videos that misrepresented actual trading outcomes, showcasing profitable trades that were later found to be orchestrated. Additionally, there are allegations that losing bets were falsely portrayed as wins, fostering gambling-like behavior among viewers.
“We have been looking into the allegations of predatory marketing practices common in the emerging prediction market sector, which pose serious issues,” the Council emphasized.
It is significant to distinguish that this investigation is separate from ongoing legal challenges faced by Kalshi, which is currently the subject of a $36 billion lawsuit filed by New York Attorney General Letitia James for allegedly operating unlicensed gambling activities.
CFTC Announces Regulatory Scrutiny
Simultaneously, the Commodity Futures Trading Commission (CFTC) issued a statement regarding event contracts under its oversight. The Commission noted a rising number of applications linked to incentive programs for market making and liquidity, while urging platforms to adhere to transparency and compliance with established regulatory guidelines.
These developments could have implications for the prediction market industry, which is estimated to be worth around $300 billion. In July, Kalshi, Polymarket, and Polymarket US recorded a combined trading volume of $50.59 billion.
Furthermore, discussions in the U.S. Congress suggest the possibility of federal measures to address regulatory conflicts between the CFTC and individual states regarding prediction platform oversight.
