New York City Council has opened an investigation Wednesday into how Kalshi, Polymarket, Coinbase and Gemini Titan advertise prediction contracts to city residents.

Speaker Julie Menin announced that she sent letters to the four platforms. They have 14 days to disclose their New York user numbers, marketing methods, and how much they make in the city, among other things.

Why the NYC Council Targeted Prediction Markets

Prediction markets let users buy contracts that pay out based on real-world outcomes. Events across sports, elections, weather, and pop culture now trade as tradable instruments.

However, the sector has drawn repeated regulatory attention, and this action is the latest example. New York’s inquiry centers on how the platforms market and advertise in the city. It targets marketing that may be false, deceptive, or abusive, with specific concern for ads aimed at young people.

The notice also highlighted that marketing restrictions and consumer protections that bind casinos and licensed sportsbooks in New York do not reach these platforms. Menin said the Council would use its full power against predatory marketing.

“Prediction markets aggressively entice consumers to bet and wager on sports, politics, culture, weather, and pretty much anything. We refuse to let New Yorkers, especially our young people, become collateral damage,” she noted.

Meanwhile, Harvey Epstein, who chairs the Committee on Consumer and Worker Protection, cited forecasts of $300 billion in annual prediction market volume.

“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,” he said.

The Council said it will investigate claims that Polymarket used or permitted social media influencers to draw young adults into wagering on event contracts through misleading marketing.

According to the Council, the reported tactics included influencer promotions that were not disclosed, videos showing fake trades on sites built to look like Polymarket, staged wins that would in fact have lost money, and encouragement of insider trading.

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A City Probe Lands on a Federal Fight

New York’s move is not its first against prediction markets, and it is not alone. State Attorney General Letitia James sued Kalshi in July and Coinbase and Gemini in April.

Kentucky’s attorney general has also pursued lawsuits against Kalshi and Polymarket in June. Wisconsin’s DOJ brought its own case against Kalshi, Robinhood, Coinbase, Polymarket, and Crypto.com.

The pushback runs both ways. The Commodity Futures Trading Commission (CFTC) sued New York in April over state gambling enforcement, arguing federal law overrides state statutes.

Responses to the Council are due within two weeks. The harder question is whether New York can write advertising rules that survive a federal preemption challenge.

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Source: BeInCrypto