NYC Council probes prediction markets over advertising practices

New York City's Council is probing four prediction markets over deceptive marketing practices. The investigation includes Gemini Titan, Kalshi, Polymarket - all based in New York - and Coinbase, based in Texas. Prediction markets allow users to wager on a range of events from sports to politics. NYC Council Speaker Julie Menin stated that the probe aims to protect New Yorkers, especially young people, from becoming collateral damage due to abusive marketing.

The companies were selected based on public reports and information examined as part of the ongoing investigation into the prediction market industry. The Council's inquiry could be expanded to include more platforms if needed. The probe follows a June investigation by the Wall Street Journal which revealed Polymarket paid online content creators to post misleading videos about their earnings.

Polymarket responded by conducting an audit of its promotional content. Menin, in a letter to Polymarket founder and CEO Shayne Coplan, said the investigation will determine whether more legislation, enforcement and education are necessary to combat abusive marketing in New York City. Polymarket and Coinbase have both responded to the investigation, with Coinbase stating they comply with all applicable laws.

The city's probe reflects the ongoing debate between states and the federal government over regulatory control of prediction markets. Several states, including New York, have filed lawsuits against prediction market platforms alleging illegal gambling operations that violate state laws. The Commodity Futures Trading Commission, the federal agency that oversees prediction markets, has also filed lawsuits in an attempt to block states from tightening regulations.

However, the New York City Council's investigation does not focus on whether the practices violate state gambling laws.