The regulatory battle over U.S. prediction markets intensified on multiple fronts, as New York City Council opened a marketing probe into four platforms and the CFTC used emergency authority to keep Kalshi operating in New York.
New York City Council Speaker Julie Menin said the council has been examining allegations of “false, deceptive, unconscionable, and objectionable marketing practices” in the prediction market sector for several months. Letters were sent to Polymarket, Kalshi, Coinbase and Gemini Titan seeking information on how event contracts covering sports, politics, culture and weather are advertised. The council plans a hearing and may consider new consumer protection rules or legislation.
The inquiry follows a Wall Street Journal report alleging Polymarket worked with content creators on promotions that made simulated trades appear to involve real money. The Journal reviewed 1,105 videos posted between December 2025 and mid-May, estimating about 70% used simulated trading, displayed roughly $1.9 million in simulated bets and nearly $900,000 in displayed winnings that would have been losses on the live platform. The report said creators received $2,000 to $3,000 per month through marketing contractor Virality and were told not to disclose sponsorships; analytics firm Tubular estimated the videos generated more than 140 million views.
Polymarket said it is engaging with the council, while Coinbase and Kalshi defended their businesses. The city inquiry is separate from state litigation; New York Attorney General Letitia James has sued Coinbase Financial Markets and Gemini Titan, seeking at least $2.2 billion from Coinbase and $1.2 billion from Gemini, and a federal judge denied Kalshi’s preliminary injunction request in July.
On the federal side, the CFTC invoked emergency authority Tuesday to order Kalshi to keep operating in New York. Chairman Mike Selig said “Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws” and accused New York of trying to make the contracts “waste away under its iron curtain of state gaming laws.” The Information reported Kalshi has reached a $4 billion annualized revenue run rate, double its level two months ago, and is raising at a $40 billion valuation.
In the wider crypto market, Harmony suffered an unauthorized mint of 4 billion ONE, about 26% of the token supply, with 2.8 billion dumped to exchanges and the network pursuing freezes and a possible rollback. Fidelity is adding staking and quarterly cash distributions to its FETH Ethereum ETF, while MoneyGram expanded on Solana with a global crypto-to-cash service. BTC traded near $64,000 and ETH near $1,910 ahead of CPI; Bitcoin ETFs saw $8 million in net inflows, while Ether ETFs saw $1.7 million in outflows.
