The New York City Council has opened an investigation into Kalshi, Polymarket, Coinbase, and Gemini Titan regarding whether prediction-market operators were advertising their products in New York City public spaces in a false, deceptive, or potentially predatory manner. The greatest scrutiny is whether the advertising is directed at younger consumers or encourages speculative activity.
At the time, according to Council Speaker Julie Menin, officials were wary of aggressive efforts to promote gambling on outcomes in sports, politics, entertainment, culture and weather. The Council also asked all four companies to provide details of their New York promotional efforts.
The companies were chosen based on the news reports, publicly available information and their advertising visibility in New York, but the probe could ultimately include other operators.
Polymarket’s marketing practices have come under scrutiny following a report from the Wall Street Journal that the company allegedly solicited online influencers to promote prediction market trades, and in doing so, simulated or exaggerated the profits from their trading activity, creating the impression that the trades were more profitable than they actually were.
Polymarket stated it would review and audit its advertisements. City officials are also investigating whether similar tactics were used elsewhere and whether some young adults were misled.
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Advertising was the main focus of the investigation, not the legality of prediction-market contracts. According to Coinbase, it enables federally regulated prediction markets that are overseen by the Commodity Futures Trading Commission, and that it complies with applicable law.
Polymarket said it expected to engage with the Council, but Kalshi and Gemini Titan had not immediately responded to requests for comment.
There are also active legal battles over whether event contracts are regulated by states or federal regulators. New York Attorney General Letitia James has filed lawsuits against Coinbase, Gemini Titan and Kalshi for offering event contracts, saying that they violate state gambling laws.
At the federal level, the CFTC has resisted state efforts to ban prediction markets, arguing that derivatives market regulation is within the Commission’s statutory authority. The legality of some contracts, particularly those involving sports betting, is not yet settled.
A decision may be needed relatively soon, with prediction markets for the NFL regular season and the 2026 U.S. midterm elections expected to generate considerable trade volume. Though Kalshi, Polymarket and Gemini are all headquartered in New York, Coinbase’s largest office is in Texas, with announced preparation for expansion to a New York office.
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As courts issue competing rulings and regulators advocate conflicting models of prediction-market regulation, the City Council investigation represents yet another front in the battle over the future of the industry.
Its results could influence the development of future city regulations or enforcement decisions, or the creation of public education campaigns. The investigation does not conclude that any of the firms broke the law.
