The New York City Council is investigating prediction markets Polymarket, Kalshi, Coinbase and Gemini Titan for alleged deceptive marketing and targeting underaged users.
The probe marks the latest battle in the mounting legal and regulatory war prediction markets are fighting since bursting into the mainstream in 2024.
Council Speaker Julie Menin wrote the companies letters Monday demanding answers on how much they earn in New York, the number of users who are city residents and how their marketing operations function. Among her over 60 questions, Manhattan Dem wants answers about how the companies comply with consumer protection laws.
The letters came just over a week after New York Attorney General Letitia James sued Kalshi, alleging the company is illegally operating a gambling app. James has notably refrained from targeting Polymarket to date.
In her missive to Polymarket founder and CEO Shayne Coplan, Menin sought details about promotional videos that she said appeared to show fake trades and promoted insider trading on social media. Some of the Polymarket advertisements may have targeted minors, the speaker added.
She cited a June report from the Wall Street Journal analyzing more than 1,100 videos made by Polymarket creators, along with instructional materials and interviews with influencers who have worked with the company. The report found that 70% featured dummy sites the company used to film fake trades.
A Polymarket spokesperson said the company looks forward to engaging with the City Council.
A Coinbase spokeswoman said the company “fully complies with applicable laws.”
Kalshi declined to comment, and a Gemini Titan spokesperson didn’t respond to The Post.
The City Council doesn’t have the power to bring criminal charges, but it can issue subpoenas forcing companies to produce documents.
Menin said the body was weighing legislation that could give “increased enforcement, public education campaigns, health measures, and/or the raising or redirecting of public funds” in regard to prediction markets, adding that it intends to host public hearings.
Kalshi and other prediction markets argue that their businesses differ from sports gambling because users trade against each other, rather than against the house, a practice that resembles an exchange.
Meanwhile the Commodity Futures Trading Commission, which has maintained it has exclusive authority to regulate prediction markets, is pushing back on James’ suit against Kalshi.
“The New York State Attorney General does not set the rules for national derivatives markets,” said CFTC spokeswoman Brooke Nethercott said Tuesday. “That’s the Congressionally mandated role of the CFTC. As stated in the order, Kalshi is required to operate as normal to maintain market integrity and stability.”
The CFTC recently told Kalshi “to continue to operate in accordance with the Commodity Exchange Act’s Core Principles” in the face of James’s complaint, a move the CFTC described as part of its emergency authority.
Kalshi made overtures to New York authorities in July, offering a share of its trade revenue in taxes and volunteering to allow users to exclude themselves from the app, the Journal previously reported.
For its part, Polymarket has kicked off a reorganization of its marketing team. That includes hiring Travis VanderZanden, founder of the e-scooter company Bird, as head of growth, VanderZanden wrote in a LinkedIn post Tuesday.