New York City Council investigates Polymarket and Coinbase marketing practices

The New York City Council is launching an investigation into the marketing practices of prediction market platforms, including Polymarket, Kalshi, Coinbase, and Gemini Titan, as announced by Council Speaker Julie Menin on Wednesday. This inquiry comes amid allegations of "false, deceptive, unconscionable, and objectionable marketing practices" that have raised concerns about consumer protection and transparency in the rapidly growing sector of event contract exchanges.

Menin's office has been scrutinizing these platforms for several months, particularly focusing on claims reported by The Wall Street Journal that Polymarket misled consumers through its marketing strategies. The Journal highlighted instances where the platform made it appear as though partnered content creators were successful users of the platform when, in fact, they were not betting their own money. This revelation has prompted scrutiny from the Commodity Futures Trading Commission, which oversees prediction markets at the federal level.

In her communication with the platforms, Menin emphasized the need to understand whether similar marketing tactics are employed by other companies in the industry. A memo accompanying her letters indicated that the council is considering potential legislative actions or policy changes based on the findings of this investigation. A hearing is also planned to delve into the matter further. Notably, the inquiry is not aimed at determining if these platforms violate New York's gambling laws.

New York state is currently litigating against Kalshi, Coinbase, and Gemini, claiming they are operating illegal gambling operations, while the companies maintain they are federally regulated financial exchanges. Polymarket is not currently involved in any litigation with the state. A spokesperson for Polymarket expressed willingness to engage with the council, while Coinbase reiterated its compliance with applicable laws. Responses from Kalshi and Gemini remain pending.