Key Moments:
- Kalshi raised its federal lobbying expenditures to $1.8 million in the first half of 2026, surpassing its total outlay from 2025
- The American Gaming Association committed $1.39 million to lobbying so far in 2026, increasing its spend by approximately 30% over the same period in 2025
- Congressional investigations into insider trading on prediction platforms remain ongoing, with Kalshi and Polymarket offering contrasting responses to House investigators
Lobbying Efforts Surge Amid Regulatory Debates
Prediction markets have become the focal point of an intense lobbying campaign in Washington, with both event-contract platforms and gaming industry giants channeling significant resources to influence how these markets are governed. Recent federal lobbying disclosures reveal that Kalshi dramatically ramped up its lobbying presence in the first half of 2026, recording $990,000 in direct expenditures and nearly $1.8 million in total advocacy costs when including outside firms. This figure has already overtaken the approximately $1 million spent throughout all of 2025, marking the company’s largest push in Washington to date.
The casino and gaming industry has responded in kind. The American Gaming Association has directed $1.39 million towards lobbying so far this year, with its total federal advocacy expenses nearly matching Kalshi’s at $1.8 million. This represents an increase of about 30% compared to the same stretch in 2025. Cherokee Nation, a casino and gaming operator, has also upped its involvement, reporting $600,000 in lobbying during the same period.
While Kalshi’s primary rival, Polymarket, remains a smaller presence, a single firm reported $180,000 in lobbying on its behalf during the first half of 2026, putting it on pace to equal last year’s $360,000 total. Kalshi, by contrast, now employs seven lobbying entities, including its own in-house government affairs team.
| Entity | H1 2026 Lobbying Spend | H1 2025 Lobbying Spend | Notes |
|---|---|---|---|
| Kalshi | $1,800,000 | ~$1,000,000 (full year) | Includes outside firms |
| American Gaming Association | $1,800,000 | 30% less | Includes outside firms |
| Cherokee Nation | $600,000 | Not specified | |
| Polymarket | $180,000 | On pace for $360,000 | Represents one lobbying firm |
Insider Trading and Political Scrutiny
The increase in lobbying coincides with heightened political scrutiny of prediction markets. Concerns regarding insider trading have intensified following trades executed prior to U.S. military operations involving Venezuela and Iran. Recent Wall Street Journal reporting highlighted wagers that may have relied on confidential political information. There have also been incidents such as the suspension of a teleprompter operator for President Donald Trump after possible use of nonpublic information to trade on Kalshi was uncovered by investigators.
Both Kalshi and Polymarket have stated that they have implemented enhanced measures to monitor and prevent insider trading. Lawmakers, however, have expanded their focus beyond market integrity to contracts relating to sports, political events, and government actions.
Strategic Positioning in Washington
Kalshi has sought to broaden its political reach by enlisting former officials from the Obama and Biden administrations and hiring Donald Trump Jr. as an advisor. The company’s CEO, Tarek Mansour, made an appearance at the Capitol alongside Representative Josh Gottheimer to advocate for legislation directed at preventing underage online gambling.
Proponents of prediction markets consider these exchanges as upstarts vying against an entrenched industry with longstanding legislative connections. Patrick McHenry, now serving as a senior adviser to the Coalition for Prediction Markets, remarked that casino operators “built much of the existing policy infrastructure in both Congress and state governments long before prediction exchanges emerged, although he believes the newer companies are steadily improving their relationships with lawmakers.” Kalshi did not directly address this and referred inquiries to McHenry.
Legislative and Regulatory Developments
Multiple legislative proposals have emerged in Congress aimed at addressing insider trading and curbing contracts tied to sports, elections, and military situations. Sports contracts remain the top-traded category on these platforms.
Prediction market operators argue that sports contracts are akin to derivatives linked to commodities and should fall under the Commodity Futures Trading Commission’s (CFTC) jurisdiction. Opponents contend that these contracts function as sports betting and should be regulated at the state level.
The issue was discussed during Senate Commerce Committee hearings, where lawmakers examined the distinction between sports event contracts and gambling. At a House Agriculture Committee subcommittee hearing, Representative Dusty Johnson observed that “many Americans view the products as indistinguishable from sports betting while others see them as legitimate financial instruments that aggregate information.” He questioned whether current laws and regulators can adequately differentiate between the two, emphasizing that the CFTC is not a gambling regulator.
Regulatory Outlook and Next Steps
While major legislative action remains uncertain as attention shifts toward the November elections, narrower provisions may still find their way into larger bills before Congress adjourns for the year. Analysts continue to view the CFTC as the agency most likely to influence the immediate regulatory future of prediction markets. The CFTC introduced a proposed rule regarding prediction markets in June and is currently seeking public comments.
TD Cowen policy analyst Jaret Seiberg noted that the absence of congressional activity presently benefits exchanges, as maintaining the status quo is preferable for operators compared to the introduction of new legislative restrictions.
Congressional Oversight and Ongoing Investigations
Congressional oversight into insider trading on prediction platforms is ongoing. House Oversight and Reform Committee Chairman James Comer continues to lead an investigation into how firms monitor insider trading. An individual familiar with the inquiry reported that Kalshi and Polymarket received notably different treatment during recent briefings – “Kalshi’s presentation was viewed positively, while committee members questioned Polymarket after the company sent outside legal counsel rather than company representatives.”
Polymarket attributed sending legal counsel to a misunderstanding and affirmed it will “continue cooperating fully with the committee’s investigation.”
Kalshi is also scheduled to brief investigators regarding transactions by Trump’s former teleprompter operator in so-called mention markets, which allow speculation on whether specific words will be mentioned during speeches or public events. The company reportedly aims to demonstrate how its internal controls flagged these trades involving material, nonpublic information.
For the time being, the decisive battle over the future of prediction markets may be playing out not on the exchanges themselves, but in Washington, where companies and their industry opponents are making major investments to shape the rules governing this rapidly evolving sector.
- Author
Daniel Williams
