N.Y. City Council to investigation prediction market platforms

Aug. 12 (UPI) — The New York City Council announced Wednesday that it is investigating the advertising practices of prediction market platforms in the city.

Council Speaker Julie Menin sent letters to four prediction market companies: Kalshi, Polymarket, Coinbase and Gemini Titan saying the council will investigate allegations of “false, deceptive, unconscionable and objectionable marketing practices.”

“Prediction markets aggressively entice consumers to bet and wager on sports, politics, culture, weather and pretty much anything,” Menin said in a statement. “I intend to harness the full power of the Council to protect New Yorkers from deceptive and predatory marketing practices by prediction market platforms.”

The Wall Street Journal published an investigation in June that showed that Polymarket used social media influencers to make it look like they were making a lot of money by betting on the platform. But they weren’t actually betting with their own money.

Some other deceptive practices the council said it’s investigating are undisclosed influencer marketing, videos showing non-existent trades on websites designed to appear similar to Polymarket, fictitious depiction of profitable wagers that actually would have generated losses and the promotion of insider trading.

On Tuesday, CNBC reported that Polymarket is working to change its marketing strategy after the Commodity Futures Trading Commission launched an investigation.

The city council investigation is critical to determining what legislation, regulations and programs are needed, Menin said.

“With the industry aggressively marketing to New Yorkers, we have a responsibility to investigate their claims and the advertising tactics these companies are using to ensure they are following the law,” Council Member Harvey Epstein, chair of the Committee on Consumer and Worker Protection, said in a statement. “I look forward to working with the speaker and my colleagues to ***ess the need for new legislation to protect consumers from predatory advertising and the potentially addictive nature of prediction markets.”

The state of New York has filed lawsuits against Kalshi, Coinbase and Gemini saying that they are running illegal gambling operations. The platforms have argued that they are federally regulated financial exchanges and do not fall under state betting laws.

Kalshi, Polymarket and Gemini are all based in New York City. Coinbase is based in Texas but has announced plans to hire more than 1,000 people in New York.