The New York City Council has launched an investigation into prediction market platforms Polymarket, Kalshi, Gemini Titan, and Coinbase over allegations of deceptive and predatory marketing targeting young traders. The probe follows a Wall Street Journal report that Polymarket paid influencers to post fake trades. Concurrently, the CFTC issued guidance warning event-contract platforms against deficient incentive programs that risk encouraging wash-trading and market manipulation.
NYC Council prediction market investigation
- ▪New York City Council Speaker Julie Menin requested information from Gemini Titan, Kalshi, Polymarket, and Coinbase regarding their marketing practices and the extent of their advertising reach to New York City residents.
- ▪On August 12, 2026, the New York City Council announced an investigation into prediction market platforms Gemini Titan, Kalshi, Polymarket, and Coinbase over allegations of deceptive and predatory marketing.
- ▪The New York City Council's investigation focuses on the social harms of prediction market advertising on younger audiences and does not explore whether the platforms violate New York state gambling laws.
Polymarket influencer marketing allegations
- ▪A June 2026 Wall Street Journal investigation reported that Polymarket paid online content creators to post promotional videos that misrepresented their trading earnings using simulated interfaces and fake trades.
- ▪The New York City Council's inquiry alleges that Polymarket worked with marketing agents and social media influencers to target young adults and minors without properly disclosing paid partnerships.
- ▪The Wall Street Journal's June 2026 reporting on Polymarket's marketing campaigns prompted an investigation into the platform by the U.S. Commodity Futures Trading Commission.
CFTC incentive program guidance
- ▪The U.S. Commodity Futures Trading Commission warned that high-volume rewards programs on prediction market platforms can encourage wash-trading, pre-arranged trading, or other fraudulent and manipulative trading practices.
- ▪The U.S. Commodity Futures Trading Commission cautioned that market-maker programs offering stipends and rebates to cover losses or guarantee net processes could encourage fraudulent behavior and market manipulation.
- ▪On August 12, 2026, the U.S. Commodity Futures Trading Commission issued guidance warning prediction market platforms that their filings for trading incentive programs are frequently procedurally or substantively deficient.
Platform compliance responses
- ▪A Coinbase spokesperson stated that the company fully complies with applicable laws and offers customers access to federally regulated prediction markets overseen by the U.S. Commodity Futures Trading Commission.
- ▪In response to marketing allegations, Polymarket stated it would conduct an audit of its promotional content and has updated its marketing guidelines for staff and content creators.
- ▪Kalshi spokesperson Dani Lever stated that the company looks forward to educating the New York City Council about its business model and marketing practices.
Prediction market regulatory context
- ▪New York Attorney General Letitia James has filed lawsuits against Coinbase, Gemini Titan, and Kalshi, accusing the platforms of running illegal gambling operations that flout state laws.
- ▪Prediction market platforms Kalshi, Polymarket, and Gemini Titan are headquartered in New York City, while Coinbase operates out of Texas but is expanding its workforce in New York.
- ▪The U.S. Commodity Futures Trading Commission has filed lawsuits seeking to block states from tightening rules on prediction markets, arguing federal law grants it exclusive jurisdiction over derivative markets.
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