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\n Photo: Michael Nagle\/Bloomberg\/Getty Images\n <\/p>\n
Another day, another hour billed for the legal departments at Polymarket and Kalshi.<\/p>\n
On Wednesday, New York City Council Speaker Julie Menin announced<\/a> an investigation into the leading prediction markets that have been growing at an astonishing rate this year, in part thanks to their bold ad campaigns. New York City\u2019s probe is focused on the marketing itself, what she called the \u201cfalse, deceptive, unconscionable, and objectionable\u201d practices at Polymarket.<\/p>\n Letters<\/a> sent to Kalshi and Polymarket \u2014 as well as smaller prediction markets from Coinbase and Gemini \u2014 refer to The Wall Street Journal\u2019s expos\u00e9 this summer on Polymarket\u2019s wild social-media tactics<\/a>. The paper\u2019s reporters found that Polymarket was paying influencers to post screenshots of their heroic long-shot wins. Not only were the wagers bogus, the Journal found that if a user mirrored those bets, they would have actually lost money.<\/p>\n The Commodity Futures Trading Commission is already investigating the ad campaign<\/a>, and now New York City is, too. In her letter, Menin said the council is looking into whether or not similar marketing tactics were employed by Kalshi and the others. \u201cWe refuse to let New Yorkers, especially our young people, become collateral damage,\u201d she wrote<\/a> on X. City Council has the authority<\/a> to compel the companies to turn over internal documents; in this case, Menin has given them 14 days<\/a> to provide information about how many users are in the city and details on the inner workings of their marketing. Both Kalshi and Polymarket have issued statements<\/a> about looking \u201cforward\u201d to engaging with the City Council.<\/p>\n Menin isn\u2019t the only politician in New York concerned with prediction markets. Less than two weeks ago, New York attorney general Letitia James and Governor Kathy Hochul announced they were suing Kalshi for $36 billion for operating an \u201cillegal\u201d betting site that violated state rules on gambling. At least 17 states <\/a>are suing Kalshi, mostly to block the company from offering the sports-betting contracts that make up about 80 percent<\/a> of the trading volume on the site. But on Tuesday, the CFTC ordered<\/a> the company to keep operating in New York, stating that it was the federal agency that gets to set the rules on betting on everything.<\/p>\n Sign Up for the Intelligencer\u00a0Newsletter<\/p>\n Daily news about the politics, business, and technology shaping our world.<\/p>\n Vox Media, LLC Terms and Privacy Notice<\/p>\n