Kalshi leads prediction market lobbying fight against casinos

Prediction market platform Kalshi nearly doubled its annual lobbying spend in just the first six months of 2026 as a fierce battle over regulatory jurisdiction grips Washington. The company poured $1.8 million into federal lobbying through a network of seven in-house and outside firms, surpassing the $1 million it spent in all of 2025.

The traditional gambling sector is matching that aggressive pace to protect its turf, leveraging decades of established relationships. "So much of the existing infrastructure of engagement on the Hill and at the states has been by the casino industry," said Patrick McHenry, a former Republican congressman and senior advisor to the Coalition for Prediction Markets. The American Gaming Association spent $1.8 million on federal lobbying in the first half of the year, a 30% increase from the same period in 2025, while Cherokee Nation added another $600,000.

The escalating spending reflects the high financial stakes of a classification fight. Sports contracts constitute the largest segment of prediction market volume, making their legal status existential for the platforms. They argue these event contracts are financial swaps akin to commodities derivatives, keeping them under the Commodity Futures Trading Commission. The casino industry counters that they are simply unlicensed sports bets subject to state gambling laws.

This tension played out in a Tuesday House Agriculture subpanel hearing, where Rep. Dusty Johnson noted that while some view the products as innovative financial tools, "to many Americans, these products look an awful lot like sports betting." He added that the CFTC is not a gambling regulator.

Lawmakers have introduced multiple bills seeking to restrict event contracts on sports, elections, and military actions. However, legislative action is unlikely before the November elections. Attention has instead shifted to the CFTC, which released a proposed rule for prediction markets in June and is currently reviewing public comments.

For the platforms, legislative gridlock is a victory. "If you're these companies, you really don't want Congress to do anything," said Jaret Seiberg, a policy analyst at TD Cowen. "And right now, Congress isn't doing anything. So they seem to be on the winning side of this lobbying fight."

Despite this upper hand in the lobbying arms race, the industry remains under intense political scrutiny over insider trading. The House Oversight Committee is investigating trades made ahead of US military actions and a recent incident involving a former Trump teleprompter operator. Kalshi is expected to brief the committee this week on how its systems flagged those illicit trades, while rival Polymarket recently drew criticism for sending outside counsel rather than company officials to a committee briefing.