New York City Council spokesperson Julie Menin announced the launch of an investigation into the marketing and advertising practices of four prediction market platforms: Kalshi, Polymarket, Coinbase, and Gemini Titan. The focus is on alleged false, deceptive, or abusive marketing strategies, particularly targeting young people.

Menin has sent formal letters to the four platforms requesting information on their marketing practices, including revenue scale in New York, the number of city resident users, and how they comply with consumer protection laws. The letters list over 60 questions and provide a 14-day response deadline. The council has been monitoring allegations of predatory marketing in the rapid expansion of this industry in New York City for months.

Specific allegations against Polymarket include paying social media creators to produce false trading videos, using fake websites that mimic the platform interface, showcasing bets that would actually incur losses but are presented as profitable, and promoting undisclosed influencer marketing related to insider trading. The council plans to hold a public hearing on this matter and assess whether there is a need to strengthen consumer protection, minor protection, and related legislation.

Coinbase responded that it offers prediction markets regulated by the CFTC and fully complies with applicable laws, while Polymarket expressed eagerness to communicate with the city council. This investigation comes amid ongoing lawsuits by the New York State Attorney General against some platforms for illegal gambling.

At the market mechanism level, event-driven regulatory pressure is prompting prediction market platforms to adjust their marketing and customer acquisition strategies, with funding and user growth potentially shifting from aggressive digital advertising to compliant channels. Beneficiaries will be platforms recognized by federal regulators, while those under pressure will be companies relying on young users and high-exposure marketing, leading to an overall funding flow that favors transaction volumes passing compliance reviews.

Source: Public Information