The New York City Council has opened an investigation into marketing practices at four prediction market platforms: Polymarket, Kalshi, Coinbase and Gemini Titan, according to an announcement from Council Speaker Julie Menin's office on Tuesday. The probe centers on allegations of false or deceptive marketing claims made by these platforms.
The investigation targets how these platforms advertise their services to consumers. Prediction markets allow users to trade contracts based on the outcomes of events, from elections to economic data releases. Regulators have grown increasingly focused on how crypto and financial platforms market their products, particularly when those marketing claims may overstate returns or downplay risks.
Polymarket, backed by venture capital firms including Founders Fund and Andreessen Horowitz, has become the largest prediction market platform in the United States, drawing significant trading volume during major political events. Kalshi, another prediction market operator, has been in dialogue with U.S. regulators over the permissibility of event contracts. Coinbase and Gemini, both major cryptocurrency exchanges, have launched prediction market products as extensions of their existing platforms.
The Commodity Futures Trading Commission has authority over event derivatives, while the Securities and Exchange Commission has flagged concerns about how some platforms classify their offerings. State attorneys general in New York and other jurisdictions have begun scrutinizing crypto marketing practices.
The four platforms named in the probe represent the dominant players in the prediction market space in the United States. Polymarket alone has processed billions of dollars in trading volume since its 2020 launch. The investigation will examine whether marketing materials used by these platforms contain claims that cannot be substantiated or that misrepresent the risks involved in trading on their platforms.
Polymarket and Kalshi have each faced intermittent regulatory pressure in their operating jurisdictions, though both continue to operate. The inclusion of Coinbase and Gemini in the probe marks an expansion beyond dedicated prediction market operators to mainstream crypto exchanges offering prediction products as features.
The Council's action comes as local government bodies have begun examining crypto marketing practices. The four platforms would need to respond to the investigation; the scope and timeline for the probe remain unclear. If the investigation uncovers evidence of deceptive marketing, the Council could recommend enforcement action by state or federal agencies with direct authority over these platforms.
