NYC Council probes Coinbase, Polymarket, Kalshi over prediction market marketing

Daragh Thomas Wed, August 12, 2026 at 7:17 AM PDT 2 min read

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Coinbase Global Inc. (NASDAQ: COIN) has been drawn into New York City's expanding investigation into prediction markets, even as the Commodity Futures Trading Commission (CFTC) pushes back against the state's efforts to regulate the rapidly growing industry.

New York City Council Speaker Julie Menin announced an investigation into Coinbase, Polymarket, Kalshi, and Gemini Titan after sending letters to the four companies requesting details about their marketing practices.

The Council's probe adds to Coinbase's existing regulatory challenges in New York.

Attorney General Letitia James sued Coinbase and Gemini in April, alleging that their prediction market businesses constituted illegal, unlicensed gambling operations. She is seeking to block the companies from offering such products in the state.

The announcement came one day after the CFTC invoked emergency authority to order Kalshi to continue operating, a direct response to a separate lawsuit James filed seeking to block the exchange from offering event contracts.

Coinbase, Polymarket, and Kalshi Face Marketing Probe

The Council stated it is examining potentially false, deceptive, or abusive marketing by prediction market platforms, with particular concern about advertising that may reach young people.

Menin's letters posed more than 60 questions and gave the companies 14 days to respond, according to The Wall Street Journal.

While Coinbase is among the four companies under scrutiny, the Council's specific allegations focused largely on Polymarket.

Menin cited allegations that influencers promoting the platform posted videos depicting trades that did not exist, used websites designed to resemble Polymarket, and promoted insider trading.

Polymarket said it looks forward to engaging with the Council, while a Coinbase spokeswoman stated that the company "fully complies with applicable laws."

CFTC Orders Kalshi to Keep Operating

On Tuesday, the CFTC ordered Kalshi to continue operating while its legal battle with New York unfolds. The state is seeking a court order that would block Kalshi from offering event contracts and is demanding more than $36 billion in damages.

"New York has no business regulating these interstate financial markets," said CFTC Chairman Michael Selig.

The CFTC order does not end James' lawsuit, leaving the underlying dispute over state and federal authority unresolved.

Kalshi and Benzinga have an existing data collaboration agreement.

Who Gets to Regulate Prediction Markets?

New York argues that prediction markets can still fall under state gambling laws, while Kalshi and the CFTC maintain that federally regulated exchanges fall under Washington's jurisdiction.

The Council probe is separate from James' lawsuits, but together they show New York pressuring the industry on two fronts: challenging whether prediction markets can legally operate in the state while scrutinizing how they are marketed.

Image: Shutterstock

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This article Coinbase, Polymarket, Kalshi Face NYC Prediction Market Investigation originally appeared on Benzinga.com.

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