TLDR
- NYC probes Polymarket, Coinbase and Kalshi over prediction market advertising
- Polymarket marketing claims push NYC Council to examine industry ad practices
- Coinbase faces a city marketing probe alongside separate New York litigation
- Kalshi faces NYC advertising scrutiny while its state legal fight continues
- Council hearing could shape new consumer rules for prediction market platforms
New York City lawmakers have opened a prediction market advertising probe involving Polymarket, Coinbase, Kalshi, and Gemini Titan. The council is reviewing claims that event-contract promotions may mislead consumers through aggressive or unclear marketing. Speaker Julie Menin also plans a hearing as officials assess current consumer protection rules.
Polymarket Faces Scrutiny Over Promotional Campaigns
Polymarket sits at the center of the prediction market inquiry after reports questioned its creator marketing practices. The council cited those allegations while requesting information about advertising methods across the wider sector. Officials want details covering promotions tied to sports, politics, culture, weather, and other event contracts.
A Wall Street Journal investigation alleged some Polymarket creators displayed simulated trades as though they used personal funds. The report also alleged some creators showed winning outcomes that did not reflect real trading activity. The CFTC later opened an investigation covering the company’s marketing and broader business practices.
Polymarket has since adjusted parts of its marketing operation and introduced updated guidance for employees and content creators. The company has also reviewed active promotional material for compliance with its standards and disclosure requirements. Meanwhile, the council will examine whether similar prediction market methods appear across competing platforms.
Coinbase Drawn Into New York Advertising Review
Coinbase now faces a prediction market marketing review while defending its event-contract business in state litigation. The council wants information about how Coinbase promotes contracts and explains their risks to consumers. However, the city inquiry does not address whether those contracts violate New York gambling laws.
New York Attorney General Letitia James sued Coinbase Financial Markets and Gemini Titan over their event-contract businesses in April. State officials argue both companies offered products without following rules that apply to licensed betting businesses. Coinbase counters that federal commodities law governs its prediction market offering through CFTC oversight.
The dispute has created two separate regulatory tracks for Coinbase in New York. State litigation focuses on gambling and licensing, while the city focuses on marketing and consumer protection. Coinbase says customers access federally regulated prediction market products under existing federal rules.
Kalshi Faces City Probe as State Case Continues
Kalshi also received a council letter seeking details about its prediction market advertising and consumer outreach. The city wants to determine whether its promotions use methods similar to those alleged elsewhere. Kalshi has said it will explain its business model and practices to council officials.
Separately, New York state continues litigation against Kalshi over sports event contracts on its exchange. Kalshi argues the Commodity Exchange Act gives the CFTC exclusive authority over its federally regulated contracts. A federal judge rejected its preliminary injunction request in July, allowing the state case to continue.
The broader dispute places prediction market companies under pressure from both city and state authorities. Yet the city investigation remains limited to advertising conduct and possible consumer protection gaps. The planned hearing could shape future policy without deciding separate gambling-law cases already moving through court.
