The National Advertising Division (NAD) is investigating Kalshi’s marketing practices. It is particularly concerned about the lack of transparency in the company’s use of influencers and affiliates to promote the platform on social media.
Attempts to earn credibility through these methods could be more effective than high investments in TV marketing campaigns, which gambling companies have poured money into in the past.
The NAD says Kalshi has refused to cooperate with its inquiry, and it has now referred the company to “appropriate regulatory authorities, including relevant state Attorneys General, for review and possible enforcement action,” according to a press release.
The NAD reviews national advertising across all media and says, “its decisions set consistent standards for advertising truth and accuracy, delivering meaningful protection to consumers and creating fair competition for business.”
Prediction Markets Investing in Alternative Advertising
Kalshi and fellow prediction market platform Polymarket have invested heavily in influencer-led marketing and partnering with media companies. While platforms like X often flag posts made by paid partners, the relationship is not always made clear, the NAD claims.
This week, Kalshi objected to some social media posts made by its paid influencers. It asked Matt Von Swol and Gunther Eagleman to remove posts on X questioning the integrity of the Los Angeles Mayoral election.
Eagleman, real name David Freeman, promoted Kalshi’s market on who would advance between Spencer Pratt and Nithya Raman in a now-deleted post on X.
Kalshi reportedly objected to Freeman writing, “Is CA cheating to get Spencer Pratt out?” But not before the post garnered hundreds of thousands of views, boosting market volume to over $6 million.
In the main LA mayor election market, volume is over $82 million, with the majority of that on Spencer Pratt, who has been endorsed by paid promoters of both Kalshi and Polymarket.
Kalshi did not respond when asked if it continues to pay Freeman and Von Swol. And it is the lack of transparency in revealing who it pays that the NAD is declaring a problem.
Paid or Earned Media?
Kalshi has partnered with several media groups, following deals with CNN and CNBC, by joining with Fox News in April.
Building these kinds of relationships is a smarter marketing move than traditional direct advertising campaigns, according to AI Communications Firm 5W.
The company noted that 36% ($1.42 billion) of the total marketing spend ($3.9 billion) of gambling companies has been on TV ads.
Conversely, companies invested just $90 million in earned media and PR and $60 million in responsible gambling programs.
“The U.S. gambling industry has spent five years and billions of dollars buying awareness. What it has not bought, and cannot buy with the same allocation, is credibility,” said Ronn Torossian, Founder and Chairman of 5W, in a press release.
“The operators that win the next 24 months of state legalization will not be the ones with the biggest television budget at launch. They will be the ones who built earned media presence, regulatory standing, and responsible gambling credibility in the 18 months before the market opened.”
Kalshi, notably, recently pledged $2 million to the National Council on Problem Gambling (NCPG). It also announced a partnership with Sportradar this week. Like its media and influencer partnerships, these would appear to be calculated moves to build the company’s profile as a legitimate business amid a spate of legal challenges.
On the Sportradar deal, CEO Tarek Mansour said the companies are “collaborating on an integrity monitoring program to further protect our users.”
Sportradar is under increased scrutiny over claims it makes a substantial amount of revenue from illegal gambling companies. A shareholder filed a lawsuit against the company last month.
Kalshi Arming Itself for Legal Battles
The NAD noted that its investigation could lead to further enforcement action from Attorneys General. Kalshi, of course, is no stranger to defending itself against state authorities.
New Mexico became the latest state to file a lawsuit against the company this week. It is involved in litigation in over 20 different states.
One of the keys to securing its future legal status will be in taking these fights to federal courts, lawyer Stephen Piepgrass told CasinoBeats.
“In the case of prediction markets, there is an additional layer that makes state courts a less friendly venue for prediction market platforms and the CFTC: these cases involve a direct competition between federal and state regulatory authority,” said Piepgrass.
“It is not surprising that in this situation, federal courts tend to provide more deference to the federal regulator, the CFTC, while state courts tend to defer to state regulators (state AGs or the gaming board). Thus, the state–federal divide is particularly pronounced in the ongoing litigation around the country involving prediction markets.”
And Kalshi has built friends in high places. Donald Trump Jr. is a strategic advisor to the company. President Donald Trump has backed the CFTC in regulating the industry and has declared state authorities “SCUM” for voicing opposition.
Last month, Kalshi launched a new advocacy group, Americans for Fair Markets (AFM). Trump’s former assistant chief of staff, Taylor Budowich, who has worked closely with Trump Jr., will serve as the group’s strategic advisor.
By building a vast network of influencers, advisors, and media partners, Kalshi could gain enough support to secure valuable earned media, which could eventually help it secure its legal status. As the NAD investigation shows, however, this will not come without regulatory scrutiny.
