The Better Business Bureau's National Advertising Division referred prediction market platform Kalshi to regulatory authorities after the company declined to participate in a voluntary inquiry into its social media advertising practices. The referral, announced in a statement published Monday, focuses on whether Kalshi's influencers and affiliates clearly disclosed paid relationships in promotions and whether the company followed Federal Trade Commission endorsement guidelines. The advertising review body stated it will refer the matter to appropriate regulatory authorities, including relevant state Attorneys General, for possible enforcement action, and will notify the social media platforms where the advertising appeared. The case adds marketing conduct and paid promotion disclosure to the regulatory scrutiny already facing prediction market platforms over jurisdictional questions involving federal derivatives oversight and state gambling rules.
NAD Refers Kalshi to Regulatory Authorities Over Influencer Disclosure Practices
The Better Business Bureau's National Advertising Division stated the review examined whether material connections between Kalshi and influencers or affiliates were clearly and conspicuously disclosed in social media advertising. The advertising appeared across social media channels used to promote prediction trading to retail audiences. The referral moves the matter beyond self-regulation after Kalshi chose not to participate in the voluntary review process.
Kalshi's social media campaigns have drawn criticism from media watchdog groups, including claims that some promotions framed prediction trading as a "side hustle." The advertising issue involves whether retail users can clearly identify when online endorsements are sponsored, a compliance concern for platforms marketing trading products through short-form video, influencer accounts, and affiliate campaigns.
Kalshi Reports $1.5 Billion Revenue Run Rate Amid Compliance Pressure
A company spokesperson told Bloomberg that Kalshi is on track for a $1.5 billion annualized revenue run rate. The momentum supported a $1 billion funding round valuing the company at $22 billion. Social media marketing has helped the platform attract new users and expand trading volumes tied to real-world events.
The advertising referral widens the set of agencies and officials that could examine the company's operations. Prediction markets have recently dealt with user bans tied to insider trading concerns, while state regulators and the Commodity Futures Trading Commission continue to clash over who has authority over event contracts.
Bernstein Highlights Institutional Participation in Prediction Markets
A May research report from Bernstein argued that the prediction market sector is entering an "institutional" era, pointing to a block trade executed on Kalshi as a sign of improving liquidity and more efficient price discovery. Bernstein analysts wrote that the introduction of block trading and bespoke contracts could expand participation from institutional investors seeking targeted exposure to event risks.
Event contracts can be used to trade views on elections, economic data, legal outcomes, weather, and corporate events. The report presents institutional demand as a potential growth driver for platforms operating in a regulatory environment where federal derivatives oversight and state gambling rules remain contested.
FAQ
What did the Better Business Bureau's National Advertising Division do regarding Kalshi?
The Better Business Bureau's National Advertising Division referred Kalshi to regulatory authorities, including relevant state Attorneys General, after the company declined to participate in a voluntary inquiry into its social media advertising practices. The referral focuses on whether Kalshi's influencers and affiliates clearly disclosed paid relationships in promotions and whether the company followed Federal Trade Commission endorsement guidelines.
What revenue run rate did Kalshi report?
A Kalshi spokesperson told Bloomberg that the company is on track for a $1.5 billion annualized revenue run rate. This momentum supported a $1 billion funding round valuing the company at $22 billion.
