As if the endless legal challenges and outright battles between numerous U.S. states and the CFTC and prediction markets weren’t drama enough, enter the first city to join the scrum.
New York City Council Speaker Julie Menin has opened a legislative inquiry into the advertising practices of Polymarket, Kalshi, Coinbase, and Gemini Titan. Letters sent this week demand answers about promotions reaching local residents, focusing on claims of false, deceptive, and unconscionable tactics targeting younger audiences. If you’re following the New York state case against Kalshi, this may sound quite similar.
Menin stated the platforms “aggressively entice consumers to bet and wager on sports, politics, culture, weather, and pretty much anything.” The Council is examining whether current consumer protection rules adequately address these risks and will consider new legislation, enforcement, education, or health measures as a result.
The platforms received more than 60 questions covering local earnings, the number of resident traders, influencer use, age-gating steps, and internal policies on compulsive engagement. They have 14 days to reply. The Council retains subpoena authority if needed and plans public hearings to gather further input. It seems fair to view this proceeding somewhat cynically as a political and attention-seeking effort by Menin, given the ongoing statewide New York legal case led by Attorney General Letitia James.
Core Allegations from Influencer Promotions
The inquiry centers on documented promotional practices detailed in a June report. Wall Street Journal reporters reviewed more than 1,100 videos from about 10 creators. Roughly 70% showed simulated trades on dummy websites built to resemble the real platform. None of the approximately $1.9 million in depicted wagers took place on live markets.
In 118 clips, creators celebrated nearly $900,000 in fabricated wins. Identical positions would have lost more than $166,000 on the actual platform. Many of the creators were college-aged, received $2,000 to $3,000 monthly, and were instructed not to disclose the paid relationship. Some added partner labels only after questions arose. One example featured a student who appeared to win $100,000, using outdated footage and a lookalike domain.
Menin’s letter to Polymarket founder and CEO Shayne Coplan cited these findings directly. It described coordinating with marketing agents and influencers to reach young adults and potentially minors with false material, including profitable depictions that would have failed and content that appeared to encourage insider activity. Polymarket said it looks forward to engaging with the Council and has begun auditing promotional content. A Coinbase spokeswoman stated the firm “fully complies with applicable laws.”
Focus on Youth Targeting and Compulsive Risks
Officials claim to be scrutinizing how marketing may encourage repeated high-volume activity without sufficient warnings. Rules that limit traditional gaming platform marketing do not apply in the same way to prediction markets, heightening the local review. Young traders form a primary and oft-cited concern. The letters to the platforms seek data on demographic reach, underage-access prevention, and any tracking of compulsive patterns among local users.
Menin, a former consumer affairs commissioner, framed the effort in personal terms: “As a mother of four, I know firsthand the fears that come with raising kids in a world where predatory industries are constantly finding new ways to target them.”
Deputy Speaker Dr. Nantasha Williams and committee chairs Harvey Epstein and Shekar Krishnan echoed the need to examine the facts, protect young people, and hold platforms accountable before harm expands further.
Not to be excessively cynical, but when politicians speak like cliché politicians, there’s always a grain of salt to be taken.
References
- New York City Council Announces Investigation of Deceptive and Predatory Marketing Practices by Prediction Market Platforms
- New York City Probes Kalshi and Polymarket Over Social Harms – Bloomberg
- New York City Launches Sweeping Investigation Into Polymarket and Kalshi – Wall Street Journal
- We Investigated Polymarket’s Deceptive Marketing Campaign. Here’s What We Found. – Wall Street Journal
- New York City Council probing Kalshi, Polymarket and other prediction markets over marketing claims – CBS News
- NYC Council probes Polymarket over alleged predatory marketing practices – Reuters
- NYC Council launches probe of Kalshi, Polymarket over ‘deceptive’ marketing practices – New York Post
- New York City Council probes prediction markets’ marketing strategies – CNBC
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