New York City Council Speaker Julie Menin sent letters Wednesday to Polymarket, Kalshi, Coinbase and Gemini Titan, opening an investigation into how the four platforms market themselves to New Yorkers, including minors. The letters cite four specific practices: undisclosed payments to social media influencers, videos showing trades on websites built to look like Polymarket that never actually happened, footage depicting wagers as profitable when they would have lost money, and the promotion of insider trading.
Council Cites Gaps in Existing Marketing Rules
The Council says the inquiry exists because the marketing rules that already cover casinos and licensed online sports betting in New York do not apply to prediction markets. Menin previously served as Commissioner of the city’s Department of Consumer Affairs, where she investigated for-profit colleges, fraudulent auto loans, unlicensed gun sellers and debt collectors. “Prediction markets aggressively entice consumers to bet and wager on sports, politics, culture, weather, and pretty much anything,” she said. “We refuse to let New Yorkers, especially our young people, become collateral damage.”
- Deputy Speaker Dr. Nantasha Williams said the Council needs to hear from “all stakeholders” before deciding how to act.
- Council Member Harvey Epstein, who chairs the Committee on Consumer and Worker Protection, said the industry could see $300 billion in trading volume this year and that the Council has “a responsibility to investigate their claims and the advertising tactics these companies are using.”
- Council Member Shekar Krishnan, who chairs the Committee on Oversight and Investigations, said prediction market apps are “preying on young adults and minors with deceptive and sometimes outright false marketing tactics.”
Platforms Respond to the Investigation
Polymarket said it “looks forward to engaging with the New York City Council on this matter.” Coinbase said it offers customers “access to federally regulated prediction markets overseen by the CFTC” and complies with applicable law, as its broader expansion also includes Coinbase UK stock trading for eligible users. Kalshi spokesperson Dani Lever said the company looks forward to “educating the New York City Council about our business model and practices.”
Polymarket Marketing Practices Under Scrutiny
A review of 1,105 videos from December 2025 through May 2026 found that Polymarket paid content creators $2,000 to $3,000 a month to post promotional videos without requiring disclosure of the sponsorship. About 70% of those videos showed simulated trades rather than real ones.
- Roughly $1.9 million in fake bets were displayed.
- Nearly $900,000 in winnings were shown that were never won.
- The videos drew more than 140 million views on TikTok, YouTube and Instagram.
- At least $350,000 of the influencer payments reportedly went through a personal PayPal account rather than a corporate one.
Consumer Protection Inquiry Differs From Gambling Cases
The Council’s letters raise consumer protection and advertising questions, not the gambling law question that has occupied courts for most of this year. That is a different legal theory.
- Federal courts have split on whether Kalshi’s contracts, regulated as federal swaps, sit beyond the reach of state gambling law.
- The Third Circuit sided with Kalshi in New Jersey in April, ruling that federal law preempts “the regulation of trading on a designated contract market” rather than gambling generally.
- Massachusetts and Nevada courts have ruled the opposite way, ordering Kalshi to stop taking sports-related bets in each state.
- Ohio regulators are trying to fine the company $5 million, a case Kalshi is contesting in state court.
The Kalshi CEO New York lawsuit dispute remains separate from the Council’s consumer-protection investigation, as the letters focus on whether prediction-market platforms may have misled consumers through their advertising and marketing practices.
CFTC Intervention Adds to Regulatory Conflict
The letters landed one day after the CFTC itself moved to keep Kalshi operating in New York over the state’s own objections. On Aug. 11, the commission invoked emergency authority to assert federal jurisdiction over Kalshi’s contracts, contradicting the gambling lawsuit Attorney General Letitia James filed against the company on July 31 seeking up to $36 billion in penalties and restitution. “New York has no business regulating these interstate financial markets,” CFTC Chair Michael Selig said.
Polymarket Moves to Expand Academic Research
Polymarket announced on July 29 that it would fund an academic research institute studying prediction markets, led by the company’s head of data and a Carnegie Mellon economist who will not be personally compensated for the role. The company said it would have no editorial influence over the research and that fellows keep the right to publish findings critical of Polymarket. The development comes as the Polymarket New York lawsuit adds to the broader legal and regulatory scrutiny facing the prediction market platform.
Council Hearing Planned
The four platforms face a deadline to respond to Menin’s letters, and the Council has said a hearing is planned. The broader regulatory landscape also includes a New York Bitcoin lawsuit, adding another layer to the legal scrutiny surrounding cryptocurrency and digital-asset activities in New York.
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