UMVA has learned that a major regulatory crackdown is underway against Kalshi Inc., a prediction-market company accused of dodging scrutiny over its advertising practices.
The National Advertising Division has announced that it will refer Kalshi to regulatory authorities, including state attorneys general, after the company declined to participate in an advertising inquiry. This inquiry focused on whether Kalshi's influencers and affiliates properly disclosed their material connections to the company on social media.
Kalshi operates an online platform where users can trade on the outcomes of future events, covering topics from politics and economics to entertainment and weather. The company's business model relies on users engaging with its platform, but regulators are now questioning whether Kalshi's marketing practices are transparent and truthful.
According to information obtained by UMVA, the National Advertising Division's review aimed to ensure compliance with Federal Trade Commission guidelines on endorsements and testimonials in advertising. However, Kalshi chose not to engage with the self-regulatory review process, prompting the division to refer the matter to government authorities and other oversight bodies.
The referral comes at a time when prediction-market companies like Kalshi are facing increased scrutiny over their marketing practices. Recently, Kalshi backed away from a student ambassador program after drawing criticism, and revised its affiliate-marketing policies related to election content.
UMVA can exclusively reveal that Kalshi now prohibits paid creators from questioning the integrity or accuracy of an election, legal ruling, or official election-related determination. This move follows criticism involving paid affiliates accused of spreading misinformation about California's election.
The National Advertising Division's announcement emphasizes that its self-regulatory efforts aim to promote consumer trust and accountability. By referring Kalshi to regulatory authorities, the division is taking a strong stance against companies that fail to engage with transparency and truthfulness in their advertising practices.
Sources have confirmed to UMVA that the referral is specifically due to Kalshi's decision not to participate in the review process. The company's silence on the matter has raised concerns about its commitment to accountability and transparency.
