TheBlock
The New York City Council has opened a formal probe into four prediction-market platforms over alleged "false, deceptive, or abusive marketing tactics" targeting younger users. The council sent letters to Kalshi, Polymarket, Coinbase, and Gemini Titan on Wednesday, citing months of investigation into what it called predatory practices in an industry that has grown rapidly across New York City. The move lands days after the CFTC used its emergency authority to force Kalshi to remain operational despite a New York lawsuit seeking at least $36 billion in penalties, and weeks after New York Attorney General Letitia James sued Kalshi for operating what she called an illegal gambling business.
Why it matters
Prediction markets are now a multi-front regulatory fight, with federal, state, and city-level authorities openly disagreeing on how the sector should be policed. The CFTC claims exclusive jurisdiction over event contracts, including sports-related markets, and has sued several states to defend that position. New York Governor Kathy Hochul signed an executive order in April barring state employees from using confidential government information to bet on prediction markets, and Council Member Harvey Epstein said Wednesday the council may consider new consumer-protection legislation. The combined pressure amounts to overlapping oversight the industry has not faced before.
Market impact
The probe zeroes in on the marketing layer rather than the trading layer. The council cited a Wall Street Journal report that Polymarket paid social-media creators to film themselves placing fake bets on replicas of the platform, and insider trading on non-public information has emerged as a separate regulatory concern. Polymarket said it looked forward to engaging with the council; Coinbase said it offers access to federally regulated prediction markets overseen by the CFTC and complies with applicable laws. Kalshi and Gemini Titan did not respond to requests for comment. The industry scaled on aggressive growth, and the new scrutiny is aimed squarely at that playbook.
Frequently asked questions
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Why is the NYC Council investigating prediction-market platforms?
The council sent letters to Kalshi, Polymarket, Coinbase, and Gemini Titan on Wednesday over alleged "false, deceptive, or abusive marketing tactics" targeting younger users, citing months of investigation into what it called predatory practices.
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What did the Polymarket creator-payment report say?
The Wall Street Journal reported in June that Polymarket paid social-media creators to film themselves placing fake bets and wins on replicas of the platform, a claim the NYC Council cited directly in its Wednesday statement.
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What is the New York Attorney General's case against Kalshi?
NY AG Letitia James sued Kalshi last month alleging it operates an illegal gambling business. She sought a temporary restraining order, restitution for users, disgorgement of profits, and civil penalties that could total at least $36 billion.
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Why did the CFTC step in to keep Kalshi operating?
The CFTC used its emergency authority to order Kalshi to continue operating after the New York lawsuit, arguing it has "exclusive jurisdiction" over prediction markets, including sports-related event contracts.
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Could the NYC Council pass new prediction-market legislation?
Council Member Harvey Epstein said Wednesday the council may consider legislation aimed at protecting consumers, raising the prospect of new municipal rules layered on top of existing federal and state oversight.
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