NYC Council Questions Polymarket, Kalshi, Coinbase and Gemini Titan Over Marketing

Meta description: NYC Council letters ask Polymarket, Kalshi, Coinbase and Gemini Titan about marketing, user data and consumer safeguards.

Tags: Polymarket, Kalshi, Coinbase, Gemini Titan, New York City Council, CFTC, Letitia James

market_platform: none-if-cross-platform

category: Regulation

New York City Council Speaker Julie Menin sent letters on August 11 to Polymarket, Kalshi, Coinbase and Gemini Titan seeking details on their marketing and advertising practices, according to The Wall Street Journal. The Council asked each company to answer more than 60 questions within 14 days about New York operations, revenue, user data and consumer protections.

What is the New York City Council investigating?

The Council inquiry centers on whether prediction-market and related event-contract firms used false, deceptive or predatory marketing to reach New Yorkers, including young adults and people vulnerable to addictive trading or gambling behavior. The letters seek information about New York-based users, local revenue, advertising strategy, influencer relationships and internal consumer-protection controls, according to The Wall Street Journal.

The inquiry gives City Hall a formal route to examine a sector that sits between financial markets and gaming regulation. Prediction-market operators describe event contracts as federally regulated derivatives. State and local officials have increasingly argued that some consumer-facing contracts, especially sports and culture markets, resemble gambling products sold without the restrictions that apply to licensed sportsbooks and casinos.

Menin framed the inquiry as both a consumer-protection and public-health issue. In a statement reported by The Wall Street Journal, she said the Council is examining allegations involving Polymarket and whether similar marketing practices appear elsewhere in the prediction-market industry.

Why is Polymarket drawing the most detailed marketing allegations?

The most specific allegations in the Council letters focus on Polymarket’s promotional videos and influencer marketing. The Wall Street Journal reported in June that Polymarket paid content creators to post videos that presented simulated or misleading trades as if they reflected real trading outcomes. The Journal’s account of the Council probe said the letters cited concerns that promotional content included fabricated trades, undisclosed paid promotion and material that could encourage insider trading.

Those allegations matter because prediction-market interfaces can make trading look familiar to younger users who already consume sports, finance and creator-economy content through social platforms. If an influencer presents a profitable event-contract trade without disclosing payment or without making clear that the trade is simulated, the promotion can blur the line between advertising, entertainment and investment advice.

Polymarket has told reporters it is cooperating with the Council’s inquiry. The company has also been reshaping its growth operation, including hiring Travis VanderZanden, the founder of Bird, to lead growth, according to New York Post reporting on the Council probe.

Why are Kalshi, Coinbase and Gemini Titan included?

The Council letters also went to Kalshi, Coinbase and Gemini Titan, putting prediction-market native firms and larger financial or crypto-linked companies under the same local marketing review. The shared issue is not whether each company used identical promotional tactics. It is whether event-contract products were marketed to New Yorkers with adequate disclosure, age controls and consumer-risk safeguards.

Kalshi is a CFTC-regulated designated contract market and has become the central company in state-versus-federal litigation over whether states can apply gambling laws to event contracts listed on federally regulated exchanges. Coinbase and Gemini Titan are also in New York’s legal crosshairs. On April 21, New York Attorney General Letitia James sued Coinbase Financial Markets, Inc. and Gemini Titan LLC, alleging that their prediction-market products amounted to unlicensed gambling operations in violation of New York law. The attorney general’s office said it was seeking fines, forfeiture of illegal profits and restitution for customers.

Coinbase describes itself in securities filings as a remote-first company and has said it does not maintain a traditional headquarters. That corporate structure is separate from the Council’s question, which is whether New Yorkers were reached by the products and marketing practices under review.

How does this relate to Letitia James’s Kalshi lawsuit?

The Council probe is separate from the state attorney general’s litigation against Kalshi. On July 31, New York sued Kalshi, alleging that the company operated an illegal gambling business in the state without a gaming license, according to New York Business Journal reporting on the complaint. The suit seeks to halt Kalshi’s New York operations, require forfeiture of allegedly illegal gains, recover restitution for customers and impose triple damages.

That Kalshi action followed an earlier court fight involving the New York Gaming Commission. On July 8, the attorney general’s office and Governor Kathy Hochul said Kalshi had lost its lawsuit against the Gaming Commission. In that official statement, James and Hochul said New York would continue to apply its gambling laws to prediction-market operators.

Kalshi’s response has been that its contracts are regulated as derivatives under federal commodities law, not state gambling products. That argument places the company in a direct preemption fight with state regulators: Kalshi says CFTC oversight controls, while New York says state gambling law still applies to consumer-facing event contracts offered inside the state.

What has the CFTC done in the state fight?

The CFTC’s clearest recent emergency action involved Michigan, not New York. On July 14, the CFTC issued Release No. 9267-26, staying a KalshiEX emergency rule change that responded to a Michigan state court order requiring cancellation of certain previously executed trades involving Michigan residents. The CFTC also used its emergency authority to direct KalshiEX to fulfill those open trades in the ordinary course.

CFTC Chairman Michael S. Selig said in that July 14 release that a state cannot force a designated contract market to violate its federal obligations or discriminate against a state’s residents. The agency also said it had filed lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin to protect the jurisdiction Congress granted it over derivatives markets.

That order did not resolve the New York Council investigation. It does show why local consumer-protection scrutiny now sits inside a broader national contest over jurisdiction. The CFTC is asserting federal control over registered derivatives markets, while state officials are testing whether gambling and consumer-protection laws can still reach the same products when they are sold to residents as event-based wagers.

What happens next?

The four companies have 14 days from the August 11 letters to respond, placing the deadline around August 25. The responses could shape whether the Council pursues hearings, subpoenas, consumer-protection legislation or referrals to other enforcement agencies.

The near-term stakes are practical. The Council is asking for data on New York users, revenue, marketing contractors, influencer practices, age controls and addiction-risk safeguards. Those answers will give city officials a factual record for deciding whether prediction-market advertising should face tighter local rules, even as courts and the CFTC continue to fight over how far state gambling law can reach federally regulated event-contract markets.