The New York City Council launched an investigation into companies offering prediction market services, aiming to examine whether they used “false and deceptive marketing” through influencers to target young adults.
In a Wednesday notice, the council said Speaker Julie Menin sent letters to Kalshi, Polymarket, Coinbase and Gemini Titan as part of an investigation into what they called “abusive marketing” through the platforms prediction market services. The probe will determine whether New York City officials need to consider additional measures against such marketing practices, including legislation, education and enforcement.
“Apps like Polymarket are expanding rapidly unchecked,” said Council Member Shekar Krishnan, who chairs the committee on oversight and investigations. “Their unprecedented reach is because they are preying on young adults and minors with deceptive and sometimes outright false marketing tactics that pull them in and wring them dry.”
The New York City investigation is the latest action in what many expect to become a legal showdown between US state and federal regulators over prediction market offerings like contracts tied to sporting events. While many state-level gaming authorities allege that companies are illegally offering sports betting, the Commodity Futures Trading Commission (CFTC) claims that the trades amount to “swaps” under its purview as a commodities regulator.
Cointelegraph reached out to Gemini for comment on the investigation but did not receive an immediate response. A Coinbase spokesperson said that the company “offers [its] customers access to federally regulated prediction markets overseen by the [Commodity Futures Trading Commission], and fully complies with applicable laws,” while a spokesperson for Polymarket said that it “look[s] forward to engaging with The New York City Council on this matter.”
Related: Judge stays CFTCs case against US soldier over prediction market bets