The New York City Council, through the office of Speaker Adrienne Adams, announced on Wednesday that it is launching an investigation into the marketing practices of several prediction market platforms. Among the four platforms under scrutiny, three — Kalshi, Polymarket, and Gemini Titan — are headquartered in New York City. This council-led investigation is separate from a lawsuit filed by the state of New York against three of these platforms, which accuses them of operating illegal gambling operations.

In a letter sent to the four platforms — Polymarket, Kalshi, Coinbase, and Gemini Titan — the council stated that it has been reviewing allegations of false, misleading, unfair, and improper marketing practices related to event contract exchanges for several months. The investigation is focused on the platforms' marketing tactics, not on whether they violate state gambling laws.

A memorandum accompanying the letter outlined the scope of the investigation, noting that the council is not evaluating whether the event contract exchanges break New York State's gambling laws. The state is currently suing Kalshi, Coinbase, and Gemini for allegedly running illegal gambling businesses. The platforms argue they are federally regulated financial exchanges and are not subject to state-level gambling regulations. Polymarket has not been sued by the state.

The council's probe follows a report from the Wall Street Journal that accused Polymarket of engaging in misleading marketing activities. The report, published in June, claimed that Polymarket created the illusion that partnered bloggers were consistently profitable on the platform, though the bloggers were not using their own funds to trade. This report prompted the Commodity Futures Trading Commission (CFTC), the federal regulator for prediction markets, to launch its own investigation.

On Tuesday, it was reported that Polymarket has begun adjusting its marketing strategy, updating and simplifying its code of conduct for internal employees and partnered content creators. In the letter to the platforms, Speaker Adams said the council will examine whether other prediction market firms use similar advertising tactics.

The memorandum noted that the allegations against Polymarket highlight the urgency of determining whether new laws or policy changes are needed, and the council plans to hold a hearing on the topic. Kalshi, Polymarket, and Gemini are all based in New York City. Coinbase is registered in Texas but announced plans earlier this year to expand its New York City workforce to over 1,000 employees.

In response, a Polymarket spokesperson said, "We look forward to cooperating with the New York City Council on this matter." A Coinbase spokesperson stated, "Coinbase provides users with CFTC-regulated, compliant prediction market services, fully adhering to all applicable laws and regulations." Kalshi and Gemini have not yet responded to the investigation.