BBB Refers Kalshi, a Prediction Market, to State Regulators Over Ad Inquiry

The Better Business Bureau’s National Advertising Division has referred Kalshi, the prediction-market platform, to state Attorneys General and other regulators after Kalshi declined to take part in a voluntary NAD review of its social media advertising. The move signals renewed regulatory attention on how Kalshi markets itself and whether influencer-promoted content adheres to fair disclosure standards under FTC endorsement guidelines.

In a statement published on Monday, NAD said it will forward the matter to appropriate regulatory authorities for possible enforcement action. The inquiry focused on whether material connections between Kalshi and influencers or affiliates were clearly disclosed in social media promotions and whether Kalshi took adequate steps to comply with advertising rules.

Kalshi did not participate in NAD’s voluntary review, the BBB explained, and as a result the agency will notify the social platforms where Kalshi ads appeared. Separately, Media Matters for America has highlighted Kalshi’s marketing on TikTok and Instagram that framed prediction trading as a “side hustle.”

Kalshi’s rapid growth has been propelled in large part by social-media marketing, a strategy that has propelled user acquisition and trading activity 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, a momentum that helped secure a $1 billion funding round and a valuation around $22 billion.

Against this backdrop, Kalshi’s advertising practices sit within a broader regulatory context. There is an ongoing dispute between state regulators and the Commodity Futures Trading Commission over the legality and oversight of event contracts, and the industry has also faced insider-trading allegations. In a May report, Bernstein researchers argued that the sector is entering an “institutional” era, citing a Kalshi block trade as evidence of improving liquidity and more efficient price discovery. The analysts noted that block trading and bespoke contracts could broaden participation from institutions seeking targeted exposure to event risk.

Kalshi operates as a centralized prediction market, a model that sits in contrast to decentralized rivals. The platform has drawn attention not only for its growth but also for regulatory and legal questions that could shape how such markets evolve. Related coverage has highlighted ongoing state-level actions in Minnesota and Rhode Island, as well as regulatory considerations surrounding the CFTC’s approach to prediction-market activities. For readers tracking the broader regulatory arc, see the report outlining Kalshi and related developments in state actions and enforcement discussions.

Key takeaways

• NAD has referred Kalshi to state Attorneys General and other regulators for possible enforcement action after Kalshi declined to participate in the NAD review of its social-media advertising.
• The inquiry scrutinized whether Kalshi clearly disclosed paid relationships in influencer promotions and whether it complied with FTC endorsement guidelines.
• Kalshi’s growth has been accelerated by social-media marketing, with Bloomberg citing a path to a $1.5 billion annualized revenue run rate and a $22 billion valuation following a $1 billion funding round.
• The regulatory environment for prediction markets remains unsettled, with ongoing CFTC-state regulator tensions and insider-trading concerns shaping how platforms operate and market themselves.
• Analysts from Bernstein argue the sector is maturing into an institutional era, with evidence that improved liquidity and bespoke contracts could attract more institutional participants.

Regulatory scrutiny and market momentum collide

Kalshi’s situation underscores a central tension in the fast-growing prediction-market segment: rapid user growth and investor enthusiasm versus a regulatory perimeter that is still taking shape. NAD’s referral to state authorities reflects a willingness to escalate potential enforcement actions if advertising disclosures are found wanting. The agency’s move also signals to advertisers and platforms that self-regulation may not be sufficient to satisfy compliance expectations as the market scales.

From a market perspective, Kalshi’s funding-driven expansion—bolstered by a recent round that attracted significant capital and catalyzed a high enterprise value—adds urgency to how the platform balances growth with governance. While the company has pursued aggressive marketing to broaden its user base, regulators are asking whether those campaigns adequately disclose relationships with influencers and whether endorsements comply with established guidelines.

Industry observers note that the broader prediction-market landscape is undergoing a maturation phase. A Bernstein May report characterized the sector as entering an institutional era, pointing to a Kalshi block trade as an illustration of deeper liquidity and more precise price discovery. The implication is that institutional investors could increasingly demand structured products, bespoke contracts, and transparent trading venues—provided the regulatory framework can accommodate such evolution.

Beyond regulatory headlines, Kalshi’s positioning within the ecosystem remains notable. The platform sits alongside decentralized competitors in a crowded space, with recent disclosures suggesting ongoing strategic moves to enhance credibility and resilience in the face of scrutiny. In related coverage, analysts highlighted Kalshi’s collaboration with market terms and its efforts to curb malpractice through policy and tools, a topic that has also been linked to similar actions by Polymarket in response to insider trading concerns.

For readers watching the regulatory arc, the next steps are clear: regulators will likely outline whether Kalshi’s advertising practices meet statutory disclosure requirements, while Kalshi and its peers continue to navigate questions of liquidity, product design, and institutional access. The evolving stance of state authorities, the CFTC, and other watchdogs will shape how prediction markets evolve—from the structure of endorsed promotions to the types of contracts available and the participants that can access them.

What happens next remains uncertain: any enforcement actions, consent orders, or policy adjustments could recalibrate incentives for marketers, influencers, and operators in the space. Investors and users should monitor regulatory developments closely, as well as Kalshi’s responses to scrutiny and how the platform adapts its advertising and governance frameworks in the months ahead.