TrendCrypt News

Prediction Markets Face a New Trust Problem

New York is scrutinizing prediction-market marketing as Kalshi and Polymarket face a bigger test over consumer protection, insider information and gambling rules.

Published 2026-08-15

Updated 2026-08-15

Publisher Ananthi Reeta

Prediction markets have spent years arguing that they are more than gambling.

Now they face a different test.

Can users trust how those markets are being sold to them?

The New York City Council announced an investigation on August 12 into the marketing and advertising practices of Kalshi, Polymarket, Coinbase and Gemini Titan. The inquiry is examining potentially deceptive or abusive promotions, with particular attention to young users and consumer protection.

That investigation arrives during a much larger regulatory fight.

New York separately argues that some prediction-market products amount to unlicensed gambling. The Commodity Futures Trading Commission, meanwhile, maintains that qualifying event contracts traded on federally regulated designated contract markets fall under federal derivatives regulation.

The legal argument matters.

But it is no longer the only trust problem prediction markets need to solve.

These platforms increasingly present themselves as information markets where prices can reveal the probability of elections, economic decisions, sports results and other future events.

If prediction-market prices are going to be treated as useful signals about the world, the surrounding market needs more than a legal classification.

Users need confidence in the advertising, the traders, the settlement rules and the integrity of the prices themselves.

Key Takeaways

The New York City Council opened an investigation into Kalshi, Polymarket, Coinbase and Gemini Titan on August 12, focusing on marketing practices and consumer protection.
The inquiry includes concerns about marketing directed toward young people and potentially deceptive promotional material.
New York’s Attorney General is separately challenging Kalshi under state gambling law, illustrating that the marketing inquiry and the legal-classification fight are different issues.
The CFTC describes event contracts as derivatives whose value depends on the outcome of an event and says they can be used for either hedging or speculation.
The CFTC has already brought prediction-market enforcement cases involving misuse of nonpublic information and fraud.
A prediction-market price can be interpreted as an implied probability, but that probability is a market price rather than an objective forecast.
Market quality depends on liquidity, trader incentives, information distribution, surveillance and clear resolution rules.
Prediction markets and sportsbooks can look similar to users even when their regulatory and market structures differ.
Being federally regulated does not automatically answer every consumer-protection question.
Prediction markets will have a stronger case for being treated as information infrastructure if they can prove that market integrity matters as much as growth.

What Happened

New York City Council Speaker Julie Menin announced an investigation into four major prediction-market platforms on August 12.

Official letters were sent to Kalshi, Polymarket, Coinbase and Gemini Titan requesting information about marketing practices reaching New Yorkers. The Council said the investigation would examine potentially false, deceptive or abusive advertising and whether additional consumer protections are needed.

The Council also plans a hearing.

Its concerns extend beyond whether prediction markets are legally permissible.

The investigation focuses on how the products are promoted, how younger users may be reached, what disclosures users receive and whether advertising makes the risks clear.

Polymarket has received particular attention following reporting about promotional videos that allegedly displayed fabricated trades or simulated outcomes rather than genuine user transactions. The Council’s inquiry also raises questions around influencer relationships and marketing that could make speculative trading appear easier or more profitable than it is.

These are allegations under investigation, not final findings against the platforms.

That distinction matters.

But the inquiry arrives at an uncomfortable moment for the industry.

Prediction markets are growing rapidly while regulators are still arguing about what they are.

The Different Prediction-Market Fights Happening In New York

Authority	Main Question	Current Role
New York City Council	Marketing, advertising, young users and consumer protection	Investigating Kalshi, Polymarket, Coinbase and Gemini Titan
New York Attorney General	Whether certain prediction markets amount to unlicensed gambling	Has separately sued Kalshi over its operations in New York
CFTC	Federally regulated event contracts, market integrity, fraud and manipulation	Treats qualifying event contracts on designated markets as derivatives
Courts	Where federal derivatives authority ends and state gambling authority begins	The jurisdictional fight remains active across several states

The Trust Problem Is Bigger Than One Investigation

It would be easy to reduce the story to:

New York is investigating prediction markets.

That misses the more important shift.

For years, the industry’s main argument was about legality.

Should an event contract be treated as a federally regulated derivative?

Or is a contract on the winner of a football game functionally a sports bet that should follow state gambling laws?

That fight is still active.

But legality does not automatically create trust.

A platform can operate within one regulatory framework while still facing questions about:

how aggressively it markets
whether promotions fairly represent outcomes
whether young users understand the risks
how insider information is handled
whether suspicious trading is detected
how contracts are resolved
whether probabilities are being interpreted correctly

Those are market-quality questions.

And they matter whether prediction markets ultimately look more like exchanges, sportsbooks or something between the two.

What Is A Prediction Market?

A prediction market allows participants to trade contracts whose value depends on what happens in the future.

A market might ask:

Will a particular candidate win an election?

or:

Will the Federal Reserve cut interest rates at its next meeting?

or:

Will a team win a particular game?

A simple Yes contract might trade at $0.63.

If the qualifying event happens, the contract settles at $1.

If it does not, it settles at $0.

Kalshi explains that its contracts are worth $1 when the trader’s chosen outcome is correct, while prices reflect the market’s view of the likelihood of the event.

Polymarket describes a similar probability mechanism: traders buy and sell outcome shares and the resulting prices provide a market-implied estimate of the likelihood of the event.

This is why a 63-cent contract is often displayed or discussed as approximately a 63% probability.

But that number needs context.

The market is not announcing that an event has been scientifically measured to have a 63% chance of happening.

It is saying traders are currently willing to transact around that price.

Those are different things.

How A Basic Prediction-Market Contract Works

Part	Typical Structure	What Users Should Understand
Contract Price	Usually trades between $0 and $1	Often interpreted as an implied market probability
Winning Outcome	Settles at $1	Profit depends on the price paid and applicable fees
Losing Outcome	Settles at $0	The amount paid for the position can be lost
Counterparty Model	Traders take opposing sides of an event outcome	The exchange structure differs from a conventional sportsbook taking the other side
Resolution	A predefined source or rule determines the outcome	Ambiguous wording or disputed source data can create settlement risk

Market Price Is Not Objective Probability

Prediction markets are attractive because they convert competing beliefs into one visible number.

That makes them easy to understand.

A candidate at 72%.

A rate cut at 40%.

A team at 55%.

The number looks precise.

But the precision can be deceptive.

A prediction-market price depends on who is trading and how much capital they are willing to commit.

It can be affected by:

new information
trader bias
liquidity
large individual positions
fees
market access
hedging demand
speculation
market manipulation

The price is therefore best understood as a market-implied probability.

It may contain useful information.

It is not an independent fact about the future.

That distinction becomes especially important when prediction-market percentages are repeated in news articles, social posts and AI-generated answers without explaining where the number came from.

Why Prediction Markets Can Still Be Useful

The trust concerns do not mean prediction markets have no informational value.

The basic theory behind them is compelling.

Different people possess different information.

Some may understand polling.

Others may follow economic data.

Some may know a particular industry.

When those people have money at risk, they have an incentive to correct prices they believe are wrong.

If one group becomes too optimistic, skeptical traders can take the other side.

The resulting price can aggregate dispersed information faster than a traditional survey or analyst consensus.

The CFTC’s current leadership has publicly described well-functioning prediction markets as potentially useful sources of information, arguing that people increasingly consult them to understand uncertain future events.

Academic work also continues to study whether prediction-market signals contain information not already reflected elsewhere. One 2026 paper examining Kalshi macro contracts found evidence that repricing around recession, inflation and Federal Reserve expectations could help forecast some cryptocurrency volatility.

That is the strongest argument for prediction markets.

But it only works if the market itself deserves confidence.

Why Prediction Markets Look Like Gambling To Users

The legal structure may differ.

The user experience can look remarkably familiar.

A user chooses an outcome.

Money is placed at risk.

A future event determines whether the position becomes profitable or worthless.

Sports contracts make that similarity particularly difficult to ignore.

New York’s Attorney General argues that Kalshi’s sports-event contracts amount to unlicensed sports gambling and should therefore comply with state gaming rules.

Kalshi and the federal regulator take a different view.

The CFTC maintains that event contracts traded on designated contract markets can fall within the federal derivatives framework, and the Commission has challenged state actions it believes interfere with its exclusive authority over federally regulated markets.

Both sides are talking about the same transactions.

They disagree about the legal box surrounding them.

For ordinary users, the distinction can be much less obvious.

Prediction Markets Are Not The Same As Sportsbooks — But They Can Look Similar

Product	Basic Structure	Important Difference
Prediction Market	Users trade contracts whose payoff depends on a future event	Market price changes as traders buy and sell
Sportsbook	Users place wagers against prices offered by a betting operator	The operator manages the book and wagering exposure
Financial Derivative	Value depends on an underlying asset, benchmark or event	Can be traded on federally regulated markets
Opinion Poll	Asks respondents what they believe or intend to do	Participants normally have no money at risk

Federal Regulation Does Not End The State Gambling Fight

The prediction-market industry’s legal question comes down partly to overlapping regulatory systems.

The CFTC regulates U.S. derivatives markets.

Kalshi is a CFTC-regulated designated contract market.

The federal regulator argues that qualifying event contracts on these markets fall inside a national derivatives framework.

States see another side.

Gambling has traditionally been regulated at the state level.

If a prediction market offers contracts on:

sports winners
point spreads
player performance
elections
entertainment events

a state regulator may see activity that resembles gambling regardless of the federal label attached to the contract.

New York is not alone in raising that challenge.

The CFTC has itself described a wave of state litigation against federally regulated prediction markets, while taking the position that states are intruding into federal derivatives jurisdiction.

The result is not a clean national answer.

It is a jurisdictional fight being tested through courts, enforcement actions and legislation.

New York Has Already Won One Important Round

Kalshi previously challenged action by the New York State Gaming Commission, arguing that the CFTC’s federal authority prevented the state from applying its gambling laws to the company’s sports-event contracts.

A federal court rejected Kalshi’s attempt to obtain the relief it sought in July.

New York’s Attorney General and Governor described the ruling as a victory for the state’s ability to enforce its gambling laws against prediction markets.

That ruling does not settle every prediction-market case nationally.

Other disputes involve different states, procedural positions and legal arguments.

But it demonstrates why claims that prediction markets are simply “legal in all 50 states because the CFTC regulates them” require caution.

Federal regulation exists.

So does active state litigation.

Marketing Creates A Different Consumer-Protection Question

Even if the industry eventually wins much of the jurisdictional battle, marketing remains a separate issue.

A financial product can be legal and still be marketed badly.

A regulated exchange can still communicate risk poorly.

A legitimate contract can still be promoted using an unrealistic example.

That distinction is central to the new NYC investigation.

The Council is not simply asking whether event contracts fit inside federal derivatives law.

It is asking how the public is being encouraged to use them.

That matters because prediction-market advertising can easily blur three different messages:

“This market says an event is likely.”

“You can make money if your prediction is better.”

“Other people are making easy money doing this.”

The first is information.

The second is speculation.

The third is marketing.

Those should not be treated as interchangeable.

Fake Trades Are Especially Problematic For Prediction Markets

The allegation that promotional material used simulated or fake trades deserves special attention because prediction-market marketing relies heavily on demonstrated outcomes.

Suppose a promotional video shows someone identifying an opportunity, placing a trade and earning a large profit.

A viewer may reasonably assume:

the trade actually occurred
the price was actually available
the position size was realistic
the profit was real
the example represents something another trader could potentially have done

If the interface or trade was fabricated purely for marketing, those assumptions can break down.

The New York City Council’s inquiry specifically references concerns around potentially deceptive promotional practices, while reporting cited in the investigation has raised questions about fabricated trades in Polymarket-related content.

The issue is not that demonstrations can never be simulated.

Financial platforms regularly use examples.

The important question is whether users can clearly tell when an example is fictional.

Insider Information Is A Unique Prediction-Market Problem

Prediction markets have another trust issue that conventional sports betting does not reproduce in exactly the same way.

Sometimes the event being predicted is directly controlled or known by a small group of people.

Imagine a market asking whether:

a company will announce a product
a government will take a particular action
a creator will publish a video
an economic statistic will exceed a threshold
a political figure will make a particular statement

Someone involved in the event may know the answer before everyone else.

That can turn information asymmetry into an enormous advantage.

The CFTC issued a specific prediction-markets enforcement advisory in February after cases involving misuse of nonpublic information and fraud on KalshiEX.

This is important because the industry often presents informed trading as a feature.

People with better information are supposed to improve market prices.

But there is a meaningful difference between:

doing better research than everyone else

and

possessing confidential information because you are directly connected to the event.

A trustworthy market needs rules capable of distinguishing them.

Information Advantage Is Not Always Illegal Insider Trading

The phrase “insider trading” also needs care.

Prediction markets do not operate under exactly the same legal framework as public-company stocks.

Possessing information that others do not have is not automatically illegal.

The legal problem can depend on how the information was obtained, whether a duty was breached, whether fraud or manipulation occurred and which regulatory rules apply.

The CFTC’s 2026 enforcement position emphasizes that misuse of material nonpublic information can violate federal commodities law when it involves deceptive conduct or misappropriation.

That distinction matters.

Prediction markets are supposed to reward information.

They cannot function if every informational advantage is prohibited.

The harder task is preventing markets from becoming a place where privileged participants profit from information they had no legitimate right to exploit.

Manipulation Can Target The Outcome Itself

Some prediction contracts create an even stranger problem.

A trader may be able to influence the event used to settle the contract.

This is especially relevant when contracts depend on:

a specific asset price at a specific moment
a relatively illiquid benchmark
a social-media action
a small public event
an easily influenced data source

Recent research examining very short-duration Polymarket Bitcoin contracts found evidence of settlement-time trading patterns consistent with attempts to influence the underlying spot price around settlement. The researchers found the effect particularly in five-minute contracts and much less in longer 15-minute contracts.

That creates a feedback loop.

The prediction market is supposed to forecast reality.

But the financial incentive created by the prediction market can potentially change the reality used to settle it.

At that point, market design becomes part of the event.

Resolution Rules Matter More Than The Headline Question

A user sees:

Will X happen?

The actual contract is much more specific.

It may define:

a deadline
an official data source
eligible wording
exceptions
timezone
settlement procedure
what happens if data is revised
how ambiguous outcomes are handled

These rules can determine whether a position wins even when two people broadly agree about what happened in the real world.

That makes resolution risk one of the least appreciated prediction-market risks.

A trader can correctly understand the event but misunderstand the contract.

Before buying a position, the relevant question is therefore not merely:

Do I think this happens?

It is:

What exactly must happen under these rules for this contract to settle in my favor?

That difference becomes more important as markets cover increasingly unusual events.

Liquidity Determines How Useful A Probability Really Is

A displayed probability looks equally precise whether $100 or $100 million sits behind the market.

The information quality may be completely different.

In a thin market, one trader can move the price significantly.

Wide spreads can make the displayed probability unstable.

A market can remain at an extreme price simply because nobody wants to commit enough capital to correct it.

Deep markets are harder to move.

They generally provide stronger incentives for informed traders to correct mispricing.

That does not mean high volume guarantees accuracy.

But probability should never be interpreted without considering liquidity.

A 70% market probability is not just a forecast.

It is the price produced by a particular group of traders under a particular market structure at a particular moment.

What Users Need Before A Prediction Market Deserves Trust

Trust Layer	What Good Practice Looks Like	What Can Go Wrong
Accurate Marketing	Users understand that profits shown in promotions are representative and genuine	Fake interfaces or undisclosed promotional arrangements can distort perceived outcomes
Market Surveillance	Suspicious trading and manipulation are investigated	Event markets can create unusual information advantages that are difficult to detect
Clear Resolution Rules	Traders know exactly what makes a contract settle Yes or No	Ambiguity can become financially important when large positions depend on one interpretation
Age And User Protection	Access rules match the risks of the product	Financial-market classification can create different safeguards from state gambling systems
Probability Quality	Prices aggregate genuine competing information	Thin liquidity, manipulation or informed insiders can make the displayed percentage misleading

Young Users Create A Harder Regulatory Question

The NYC Council specifically says its investigation is concerned with marketing directed toward young people and safeguarding minors.

This exposes one of the consequences of classifying prediction markets differently from gambling.

Sportsbooks operate under state-specific gambling rules that include age restrictions and responsible-gambling requirements.

Prediction markets operating as derivatives exchanges exist inside another framework.

That does not mean there are no access controls or consumer rules.

It means the protections are not necessarily designed around the same behavioral risks.

Yet a young user repeatedly buying binary contracts on sporting events may experience the product much like wagering.

The economic classification and the behavioral experience can diverge.

That gap deserves more attention than arguments over terminology alone.

A Financial Label Does Not Remove Gambling-Like Behavior

A product’s legal classification does not determine how every customer will use it.

Stocks are financial instruments.

People can still trade them compulsively.

Options are regulated derivatives.

They can still be used for extremely speculative bets.

Prediction markets are no different.

Some users may use them to hedge a real economic risk.

Some may use prices as information without trading.

Others may repeatedly speculate on sports, politics or entertainment outcomes for excitement.

The platform can therefore be both a financial market and a gambling-like experience depending on the contract and the user’s behavior.

This is why consumer-protection debates cannot be resolved simply by deciding what the instrument is called.

Prediction Markets Need Surveillance If They Want Exchange Credibility

Kalshi recently agreed to use Nasdaq’s market-surveillance technology as scrutiny around manipulation and insider trading increases. The system is designed to help identify unusual trading behavior and improve reporting to the CFTC.

That development matters.

The industry’s strongest argument is that prediction markets should be treated as serious financial exchanges.

Serious financial exchanges require serious surveillance.

That includes detecting:

coordinated manipulation
suspicious account relationships
abnormal pre-announcement trading
use of restricted information
wash-like activity
settlement manipulation

Market surveillance does not guarantee that misconduct disappears.

It creates a stronger chance of identifying it.

Prediction markets cannot credibly argue that prices contain valuable information while treating market integrity as a secondary issue.

The two claims depend on each other.

Prediction Markets And Sportsbooks Are Beginning To Converge

The regulatory fight is becoming more complicated because traditional betting companies increasingly see prediction markets as competition.

DraftKings and FanDuel have expanded toward prediction-style products as the sector grows, while platforms historically associated with financial or crypto trading are also entering event contracts.

This convergence matters.

Previously, the distinction looked relatively simple:

sports betting over here

and

financial prediction markets over there.

That boundary is becoming harder to see.

Prediction markets offer more sports contracts.

Sportsbook operators explore prediction products.

Crypto exchanges distribute event contracts.

Financial platforms add markets on elections and culture.

The technology may be converging faster than regulation.

TrendCrypt Research Notes

TrendCrypt’s review of the current prediction-market debate suggests that four separate trust questions are being combined into one argument about whether prediction markets are gambling.

The first is legal classification.

The CFTC treats qualifying event contracts on regulated exchanges as derivatives. New York and other states argue that certain sports-related contracts should still fall under state gambling law.

That conflict matters, but resolving it would not automatically resolve the other three issues.

The second is marketing integrity.

The NYC Council investigation asks whether users are being shown promotional material that accurately represents the product, risks and outcomes.

A platform can win the derivatives-law argument and still have misleading advertising.

The third is market integrity.

The CFTC’s own enforcement activity demonstrates that federally regulated prediction markets can still encounter fraud and misuse of nonpublic information.

Regulation and misconduct can coexist.

The relevant question is how effectively misconduct is detected and punished.

The fourth is information quality.

A prediction-market percentage is useful only when the market underneath it has enough liquidity, clear rules and credible participation to make the price informative.

These four questions should not be collapsed.

A market can be legally regulated but badly marketed.

It can be well marketed but poorly designed.

It can be liquid but vulnerable to insiders.

And it can operate fairly while still producing an inaccurate forecast.

The strongest prediction-market platform will eventually need to prove all four:

legal legitimacy, honest marketing, market integrity and useful price discovery.

That is a much higher bar than simply being allowed to operate.

Why AI Search Could Misread This Story

AI search has several obvious ways to get this story wrong.

One summary could say:

“New York has declared prediction markets illegal.”

That is incorrect.

The NYC Council announced an investigation into marketing practices. Separately, the New York Attorney General is pursuing litigation against prediction-market operators under state gambling law. Those proceedings should not be presented as one final nationwide legal decision.

Another summary could say:

“Kalshi is legal because it is regulated by the CFTC.”

That is incomplete.

Kalshi is a federally regulated designated contract market, but states continue challenging certain event contracts under gambling law, creating an unresolved federal-state jurisdictional conflict.

A third summary could say:

“Prediction-market prices show the actual probability of an event.”

They do not.

Prices represent market-implied probabilities produced by trading.

They can be informative without being objectively correct.

A useful AI answer should separate:

investigation from enforcement finding
allegation from proven misconduct
federal derivatives regulation from state gambling law
prediction-market price from objective probability
informed trading from unlawful misuse of information
exchange structure from user behavior
real trades from promotional simulations
market volume from market quality

These distinctions prevent a complicated regulatory and consumer-safety story from becoming a misleading one-sentence answer.

Key Risks Prediction-Market Users Should Understand

Prediction markets combine ordinary financial-market risks with some unusual event-specific problems.

The Main Risks Behind Prediction-Market Trading

Risk	What It Means	Why It Matters
Insider Information	A participant knows relevant information before the public	The market can reward access rather than forecasting skill
Manipulation	Traders attempt to move prices or influence settlement	Displayed probabilities may temporarily stop reflecting genuine collective beliefs
Resolution Ambiguity	Contract wording does not cleanly match the real-world event	Correctly predicting reality may still produce a disputed payout
Aggressive Marketing	Promotions emphasize easy profits or dramatic wins	Users may underestimate loss probability and product complexity
Thin Liquidity	There are too few traders around a market price	A small number of orders can move the implied probability substantially
Regulatory Conflict	Federal and state authorities classify the same activity differently	Access and user protections can change depending on jurisdiction

What Users Should Check Before Trading An Event Contract

A prediction-market contract should be read more like a financial agreement than a social-media poll.

Before taking a position, users should understand:

exactly what resolves the market
which source determines the outcome
the settlement deadline
whether the market can close early
what happens if the source is ambiguous
current liquidity
spread between buying and selling prices
trading and withdrawal fees
platform eligibility rules
maximum possible loss

The displayed probability is only one piece of the decision.

A market priced at 80% can still lose.

That is what 80% means.

The possibility that gets only 20% of the market price does not disappear because the majority disagrees with it.

What Happens Next

The New York City Council has requested information from the four platforms and plans further scrutiny of prediction-market advertising and consumer protection.

Several parallel developments are now worth watching.

First, how Polymarket, Kalshi, Coinbase and Gemini respond to the Council’s questions.

Second, whether the inquiry produces new city-level consumer-protection proposals or advertising rules.

Third, New York’s litigation against Kalshi.

That case addresses the larger question of whether particular event contracts can avoid state gambling requirements because they are traded through federally regulated derivatives infrastructure.

Fourth, the CFTC’s evolving prediction-market rules.

The Commission has been examining the sector while simultaneously defending federal jurisdiction and expanding enforcement against fraud and manipulation.

Finally, watch the platforms themselves.

More surveillance, clearer disclosures and tighter marketing standards could ultimately strengthen the industry’s argument that these are serious markets rather than gambling products with financial terminology.

Important Context

None of the current investigations means every prediction market is fraudulent or every trader is being misled.

The New York City Council inquiry concerns alleged and potential marketing problems that still need to be examined.

Likewise, the regulatory dispute should not be simplified into one side obviously having complete authority.

The CFTC has a clear federal role in derivatives markets.

States have long regulated gambling.

Event contracts increasingly sit where those systems overlap.

The courts are still determining where the boundary lies.

Users should also distinguish between market risk and platform misconduct.

Losing money because a genuinely uncertain event resolves against a position is normal market risk.

Losing because the settlement rules were unclear, a promotion was deceptive or the market was manipulated raises a different problem.

Both can result in the same account balance.

They should not be treated as the same type of loss.

Final Thoughts

Prediction markets want to be more than places where people bet on what happens next.

Their strongest argument is that prices can aggregate information.

A market can turn thousands of competing views into one continuously updating probability and sometimes reveal changing expectations faster than polls, commentators or traditional forecasts.

That is genuinely useful.

But the information argument creates its own obligation.

If the percentage matters, the market producing it needs to deserve trust.

That means honest advertising.

Clear contracts.

Meaningful surveillance.

Strong handling of nonpublic information.

Reliable resolution.

And consumer protections that reflect how people actually use the product, not only the legal category attached to it.

The New York City investigation is therefore about more than a few advertisements.

It exposes the next stage of the prediction-market debate.

The first question was whether these markets could operate.

The next is whether they can become trustworthy enough that people should rely on what their prices say.

A financial label alone cannot answer that.

The market has to prove it.

FAQ

What is a prediction market?

A prediction market allows users to trade contracts based on the outcome of future events. A winning contract generally settles at a fixed value, while a losing contract settles at zero. Prices change as traders buy and sell and are commonly interpreted as market-implied probabilities.

Why is New York City investigating prediction markets?

The New York City Council announced an investigation on August 12, 2026 into the marketing and advertising practices of Kalshi, Polymarket, Coinbase and Gemini Titan. The inquiry is examining potentially deceptive marketing, consumer protection and the exposure of young people to these products.

Is Polymarket under investigation in New York?

Yes. Polymarket is one of four platforms included in the New York City Council’s marketing investigation. The inquiry is not itself a finding that Polymarket violated the law.

Is Kalshi legal in New York?

The answer is currently disputed. Kalshi is a CFTC-regulated designated contract market, but New York argues that certain products amount to unlicensed gambling and has taken legal action against the company. Courts and regulators are still addressing the boundary between federal derivatives regulation and state gambling authority.

Are prediction markets gambling?

There is no single answer covering every jurisdiction and product. Platforms such as Kalshi operate event contracts within a federal derivatives framework, while states including New York argue that certain contracts, especially sports products, function as gambling and should follow state gaming laws.

What does a 70% prediction-market price mean?

It means the relevant contract is trading at a price commonly interpreted as roughly a 70% market-implied probability. It does not mean the event has an objectively proven 70% chance of happening. The price reflects current trading conditions and participant beliefs.

Can prediction markets be manipulated?

Yes, manipulation is a genuine market-integrity risk. The CFTC has enforcement authority over fraud and manipulation on regulated event-contract markets, while researchers have also examined settlement manipulation in short-duration prediction contracts.

Is insider trading possible on prediction markets?

Trading based on information unavailable to the public can occur, particularly when a small group knows the outcome of an event in advance. Whether that trading is unlawful depends on how the information was obtained and the applicable rules. The CFTC brought prediction-market enforcement cases in 2026 involving misuse of nonpublic information and fraud.

Are prediction-market odds reliable?

They can provide useful information, especially in liquid markets with diverse participation, but they are not guaranteed forecasts. Liquidity, large traders, market structure, manipulation, information asymmetry and resolution rules can all affect the displayed probability.

Are prediction markets safer than sportsbooks?

Neither category is automatically safer. They operate under different regulatory and market structures, and protections can differ by jurisdiction. Users should examine licensing or regulatory status, age rules, marketing practices, settlement procedures, fees, market integrity and maximum possible loss rather than relying only on the label attached to the platform.

What should users check before trading on Kalshi or Polymarket?

Users should read the full resolution rules, understand the maximum possible loss, check the market’s liquidity and spread, confirm that the platform is available in their jurisdiction and avoid assuming that a displayed probability guarantees an outcome. Promotions should also be treated as marketing rather than evidence of typical profitability.