Prediction Market Rules Could Change In NYC

NEW YORK, NY— The City Council will investigate whether prediction-market platforms and their promoters have used false, deceptive or abusive advertising to attract New Yorkers, and whether the City needs stronger consumer protections.

Council Speaker Julie Menin sent letters to Kalshi, Polymarket, Coinbase and Gemini Titan seeking information about their marketing practices as the industry expands in New York City.

The Council also plans to hold a hearing as it considers whether to pursue new legislation, enforcement measures, public education campaigns, health initiatives or funding related to prediction markets.

Polymarket and Kalshi spokespersons told CNBC they look forward to engaging with the City Council and explaining their business practices.

Menin said the Council has spent months examining allegations involving prediction-market marketing.

One focus will be Polymarket and its use of social media influencers to promote so-called event contracts, which allow users to wager on the outcomes of events ranging from sports and politics to culture and weather.

According to the Council, reported tactics include influencers failing to disclose that they were promoting prediction markets, videos showing trades that did not actually exist and websites designed to resemble Polymarket.

The Council also cited allegations that marketing showed fictional profitable wagers that would have resulted in losses and promoted insider trading.

The investigation will seek to determine whether those practices occurred and whether similar tactics appear across the prediction-market industry.

Menin said she is particularly concerned about marketing aimed at young adults and minors, as well as people vulnerable to compulsive wagering.

“Prediction markets aggressively entice consumers to bet and wager on sports, politics, culture, weather, and pretty much anything,” Menin said.

New York state is separately suing Kalshi, Coinbase and Gemini, alleging the companies are operating illegal gambling businesses.

Kalshi, Polymarket and Gemini are headquartered in New York City.

Coinbase, which is incorporated in Texas, has also announced plans to expand its New York City workforce to more than 1,000 employees.

The companies argue that their prediction-market products are federally regulated financial contracts and therefore fall outside New York's gambling laws.

New York imposes specific restrictions on how regulated sports betting is advertised, including prohibitions on deceptive claims, marketing aimed at minors and promotions that encourage irresponsible gambling.

Those rules do not necessarily apply to prediction-market platforms in the same way, raising questions about whether consumers receive the same protections.

The Council has requested information from the four companies and plans to hold a hearing.