Update (June 10, 6:15 pm UTC): This article was updated to reflect that BBB National Programs is not affiliated with the Better Business Bureau, but operates as an independent nonprofit.
BBB National Programs’ National Advertising Division (NAD) is referring prediction market platform Kalshi to regulatory authorities after the company declined to participate in an inquiry into its social media advertising practices, adding another layer of scrutiny to the fast-growing event trading platform.
In a statement published Monday, NAD said it will refer the matter to the appropriate regulatory authorities, including relevant state attorneys general, for possible enforcement action.
The inquiry examined whether Kalshi’s influencers and affiliates clearly disclosed paid relationships in social media promotions and whether the company took adequate steps to comply with Federal Trade Commission endorsement guidelines.
BBB National Programs was created in 2019 when the Council of Better Business Bureaus restructured into two independent nonprofit organizations, separating its industry self-regulation programs from the Better Business Bureau network. It is not affiliated with the Better Business Bureau.
According to the organization, Kalshi declined to participate in NAD’s voluntary self-regulatory review of its advertising practices. As a result, the organization will also notify the social media platforms where the advertising appeared.
“At issue for NAD was whether material connections between Kalshi and influencers or affiliates were clearly and conspicuously disclosed in social media advertising,” BBB National Programs said.
Crypto influencer John Wang joined Kalshi in August. Source: John Wang on X.com.
Kalshi’s advertising practices have also drawn scrutiny from Media Matters for America, a nonprofit media watchdog organization, which highlighted the platform’s viral marketing campaigns on TikTok and Instagram that promoted prediction trading as a “side hustle.”
Related: Kalshi joins Polymarket in sweeping user bans to head off insider trading
Prediction markets continue rapid growth despite regulatory scrutiny
Social media marketing has fueled Kalshi’s explosive growth, helping the platform attract new users and drive trading volumes tied to real-world events.
A Kalshi spokesperson told Bloomberg that the company is on track for a $1.5 billion annualized revenue run rate, momentum that helped secure a $1 billion funding round valuing the company at $22 billion.
Kalshi is a leading centralized prediction market platform alongside decentralized rival Polymarket. Source: Bitget Wallet
Despite an ongoing jurisdictional dispute between state regulators and the Commodity Futures Trading Commission (CFTC) over event contracts, as well as allegations of insider trading, prediction markets continue to gain traction among retail and institutional participants.
A May research report from Bernstein argued that the sector is entering an “institutional” era, with analysts citing a block trade executed on Kalshi as evidence of improving liquidity and more efficient price discovery.
“We believe the introduction of block trading and bespoke contracts could expand participation from institutional investors seeking targeted exposure to event risks,” the Bernstein analysts wrote.
Related: Prediction markets legal battles heat up in Minnesota, Rhode Island
