The Better Business Bureau (BBB) said Monday that it is prepared to hold Kalshi to account over the company’s use of influencers and affiliates for social media advertising.
In a press release issued June 8, the BBB’s National Advertising Division (NAD) said it will refer the prediction market platform to authorities including state attorneys general, as part of an inquiry into the company’s social media advertising practices.
The NAD wrote that it has doubts over whether material connections between Kalshi and influencers or affiliates were “clearly and conspicuously disclosed” in social media advertising. It also questioned whether the firm takes adequate steps to ensure compliance with the Federal Trade Commission (FTC) Guides Concerning the Use of Endorsements and Testimonials in Advertising.
Kalshi opted out of investigation, says BBB
The BBB National Programs NAD provides independent self-regulation and dispute resolution services, reviewing national media advertising in an effort to set consistent standards for advertising accuracy that ensure sufficient consumer protection and fair competition for businesses.
Its boilerplate mission statement says it works on “guiding the truthfulness of advertising across the U.S.”
The BBB advertising division began looking at Kalshi as part of its wider marketplace monitoring program. That spotlight threw up questions over how Kalshi uses third parties for its social media marketing.
The Bureau claimed in its release that Kalshi “declined to participate in the NAD self-regulatory process,” which it said led to the decision to refer the case to state AGs and other authorities. The NAD suggested that Kalshi could face “possible enforcement action” as a result of its alleged failure to participate in the inquiry.
How does Kalshi use social media influencers?
Kalshi, as well as its rival Polymarket, has come under scrutiny from media, regulators, and social media users for its use of influencer marketing on social media platforms such as X and Instagram.
Some influencers were found by Kalshi not to have publicly disclosed the nature of their social media posts, and the company emphasizes that it has tightened its approach to using such partners.
Kalshi’s use of influencers has even made it into some of the court cases the company is involved in around the U.S.
In a class-action lawsuit brought against the firm in New York last fall, the plaintiffs alleged that Kalshi runs advertisements through sponsored influencers, including on one occasion “a 15-year-old gaming influencer.”
Kalshi says it has tightened up on influencer marketing
In a statement to SBC Americas, a Kalshi spokesperson stressed that the company fulfils its legal requirements related to advertising.
“We comply with all applicable advertising laws and have since strengthened our communication with influencers on this topic,” said the spokesperson.
Semafor reported on Monday that Kalshi recently announced new rules for its marketing affiliates after some political influencers were found to be using sponsored posts to promote what the outlet called “election fraud conspiracy theories.”
Both Kalshi and Polymarket reportedly asked influencers to take down “paid partnership” tags on social media posts that questioned the results of the Los Angeles mayoral election. Kalshi told the outlet that its rules now ban affiliates from questioning the integrity or accuracy of official election results.
NPR reporter Bobby Allyn posted on X that Polymarket also says that affiliate posts denying an election result would violate their terms of service, which require that creators must not spread false or misleading information.
Now, the Better Business Bureau’s referral may prompt state authorities or other federal agencies to conduct a larger investigation into how the prediction markets giant uses third parties to advertise its event contracts trading, wherein the large majority of volume comes on sports.
