The New York City Council has launched an investigation into four prediction market platforms — Polymarket, Kalshi, Coinbase and Gemini Titan — as consumer protection concerns draw heavier attention in the U.S., according to CNBC.
The inquiry is focused on advertising, consumer safeguards, the risk of youth exposure and whether the companies used misleading marketing. Council Speaker Julie Menin is leading the effort.
The council has sent letters to the four firms asking them to answer more than 60 questions. The requests cover platform operations, revenue sources, marketing spending, ad strategy, user ages, consumer protection measures and how each company complies with federal, state and local laws.
Lawmakers focus on advertising and youth access
The council is paying particular attention to the sector’s growing use of social media and outdoor ads. Some promotions describe event contracts as trading products that are easy to profit from. Lawmakers said that kind of messaging may downplay the risk of losing money and may attract younger people with limited financial experience.
The council also asked the companies to explain whether their advertising targets minors or younger users and how their age-verification systems work. As prediction markets expand through mobile apps, social media and influencer marketing, lawmakers said teenagers may underestimate the financial risks tied to event contracts.
Polymarket singled out over promotional materials
Polymarket has emerged as one of the main targets in the investigation. The council cited reporting that some Polymarket promotional videos used simulated or fictional trading scenes showing traders quickly making large returns through event predictions. Lawmakers questioned whether that presentation could give consumers a false impression of real profit odds and potential losses.
Some promotional materials were also questioned for invoking ideas such as “inside information” to attract users. Prediction markets cover politics, sports, the economy, war and entertainment, and prices can move quickly on new information. How platforms handle trading that may involve nonpublic information has recently become an issue for U.S. regulators and Congress.
The controversy has already reached the federal level. Members of Congress have previously asked the Federal Trade Commission, or FTC, to review prediction market advertising and assess whether some promotions could amount to unfair or deceptive business practices.
Legal status of prediction markets remains contested
The council’s inquiry also brings renewed attention to the unsettled legal status of prediction markets in the U.S. Kalshi describes itself as a designated contract market regulated by the Commodity Futures Trading Commission, or CFTC, and says its event contracts operate under federal commodities law.
New York state authorities have taken a different view on some products. New York Attorney General Letitia James has sued Kalshi, arguing that certain sports event contracts offered by the company amount to unlicensed gambling and may bypass state rules on licensing, taxation and consumer protection for gambling operators.
Kalshi says its business falls under federal CFTC oversight and that its event contracts should be governed by the federal commodities framework. The dispute has created a jurisdictional clash between federal commodities regulation and state gambling law, one that could shape how prediction markets offer services across the U.S. going forward.
Council may use findings to support local legislation
The New York City Council cannot directly bring criminal charges through this investigation, but it does have the power to issue subpoenas and require companies to produce documents. If the firms do not cooperate, the council can seek the materials through additional legal procedures.
The findings could also inform future local legislation covering ad disclosures, youth protections, risk warnings and consumer education. The council said it wants a clearer picture of how platforms describe prediction markets to users and whether existing rules do enough to disclose the financial losses event contracts can cause.
Polymarket and Kalshi have become major global event contract platforms, and large crypto exchanges such as Coinbase and Gemini have also expanded into the space. As trading in political, sports and other event contracts grows, the U.S. debate around prediction markets now spans legal classification, advertising practices, protection of minors, insider trading concerns and disclosure standards. The New York City Council’s probe is set to examine the companies’ actual marketing and consumer protection practices more closely, and it may influence the direction of future local rulemaking.