Key facts
- The BBB's National Advertising Division (NAD) is referring prediction market platform Kalshi to regulatory authorities.
- The referral follows Kalshi's refusal to participate in an inquiry into its social media advertising practices.
- The inquiry investigated influencer disclosure and compliance with FTC endorsement guidelines.
- The NAD will notify state attorneys general and social media platforms about the matter.
The Better Business Bureau's National Advertising Division (NAD) has escalated its review of prediction market platform Kalshi by referring the company to state regulators. This action follows Kalshi's refusal to participate in the NAD's inquiry into its social media advertising practices, particularly concerning influencer disclosures and adherence to Federal Trade Commission (FTC) endorsement guidelines.
The NAD stated it will refer the matter to relevant state attorneys general for potential enforcement. Additionally, the organization will inform the social media platforms where Kalshi's advertisements appeared. The inquiry specifically questioned whether material connections between Kalshi and its influencers were clearly and conspicuously disclosed.
Kalshi's marketing practices have previously drawn attention from watchdog group Media Matters for America, which highlighted the platform's viral campaigns promoting prediction trading. Despite regulatory scrutiny and ongoing jurisdictional disputes between state regulators and the Commodity Futures Trading Commission (CFTC) over event contracts, prediction markets like Kalshi continue to experience rapid growth. Kalshi reported an annualized revenue run rate of $1.5 billion, supported by a recent $1 billion funding round that valued the company at $22 billion. Analysts from Bernstein have suggested the sector is entering an institutional phase, citing improved liquidity and price discovery on platforms like Kalshi.