Prediction Markets Step Up Lobbying

Kalshi and Polymarket are ramping up lobbying against attempts by U.S. states to regulate their sports event contracts as gambling. The companies are hiring politicians from both parties. If a court ruling allows state laws to apply to these platforms, the consequences could range from operators needing licenses and complying with local consumer protection rules to halting operations in some jurisdictions.

A report titled "Prediction Markets' Bet on Influence" from the advocacy group Demand Progress highlights a growing political influence campaign. According to the report, Kalshi's lobbying spending has increased significantly. It is reported that the company spent $1.8 million on lobbying in the first half of 2026, roughly three times the $615,000 it spent over all of 2025. In the same period, former government officials were reportedly brought into roles linked to the sector.

The people Kalshi has hired include Stephanie Cutter, a former Obama administration official, John Bivona, a former Biden administration official, Tony Hanagan, a former senior Republican House staffer, and Jed Bhuta, who has worked for Democratic members of Congress. Polymarket has reportedly hired David Urban, a former adviser to Donald Trump's presidential campaign. The report also describes the Coalition for Prediction Markets, an industry group, as a lobbying front. Former Democratic congressman Sean Patrick Maloney was appointed to lead the group, and former Republican congressman Patrick McHenry, who chaired the House Financial Services Committee, was brought in as a senior adviser. Donald Trump Jr. is reported to have ties to both companies.

Ella Fanger, a policy adviser at Demand Progress, criticized the companies' efforts. Fanger argued that state and tribal gambling laws provide a critical safeguard against predatory practices. She said prediction platforms should not be allowed to escape gambling oversight, warning that the absence of state-level oversight could leave consumers exposed to unregulated sports betting and insider trading.

Recent court decisions have encouraged states to keep fighting. In September, the Sixth U.S. Circuit Court of Appeals ruled that Ohio and Tennessee could treat sports event contracts as a form of gambling. The Ninth Circuit Court of Appeals in Nevada reached a similar conclusion. However, these rulings conflict with another decision that blocked New Jersey from regulating prediction markets. Several states have asked the U.S. Supreme Court to rule on the issue. Because the future of the sector may depend on that decision, lobbying is expected to continue. Kalshi and Polymarket may face an increasingly fragmented U.S. market.