Prediction markets face regulatory split as lobbying tops $3 million
The European Lotteries urges caution on regulating the products, while U.S. firms lobby heavily amid a federal-state legal clash.
Prediction market companies spent at least $3 million on lobbying and campaign contributions in 2026 as U.S. officials contest who has authority over the platforms.
The figures, reported by OpenSecrets, capture an industry effort unfolding alongside lawsuits and a still-unsettled federal-versus-state legal fight.
In Europe, the umbrella body for state-owned lotteries issued a call for caution when approaching the subject from a regulatory perspective.
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“Prediction markets are developing rapidly, and regulation should keep pace,” said Piet Van Baeveghem, Secretary General of The European Lotteries (EL).
“EL’s position is simple: activities that present similar risks should be subject to similar safeguards.”
The organisation urged policymakers and business leaders to treat prediction markets for their legal characteristics and associated risks, as opposed to the marketing language that accompanies them.
In the U.S., prediction-market companies argue that their event contracts are financial transactions known as swaps, regulated federally by the Commodity Futures Trading Commission (CFTC).
Many states take the opposing view: platforms offering contracts on sports and other events operate like sportsbooks or casinos, and should fall under state gambling laws.
The distinction carries substantial commercial consequences, with federal oversight offering a nationwide framework and state authority exposing platforms to different licensing rules or bans.
The debate has sharpened amid allegations involving insider trading, bets on military operations and deceptive marketing.
The CFTC has sued states seeking to enforce gambling laws against prediction-market platforms.
Meanwhile, 44 state attorneys general signed a letter to the commission in July describing prediction markets as a new form of casino.
The dispute is now being tested in federal courts, where rulings have split and the question is moving toward the Supreme Court.
Kalshi’s political contributions have reached organisations representing both parties.
In the first half of 2026, the company gave $147,500 to the Republican Attorneys General Association and $170,000 to the Democratic Attorneys General Association.
It also contributed $100,000 to the Republican Governors Association and $150,000 to the Democratic Governors Association during the same period.
Kalshi spokesperson Dani Lever said the company supports candidates from both parties.
Alongside campaign giving, Kalshi has built a broad lobbying presence, with at least one registered lobbyist in 41 states as of September.
In California, the company spent $62,000 on lobbying in the first half of 2026, including work on three assembly bills.
Projected spending on its New York effort exceeds $400,000 through July 2027.
Kalshi spent nearly $1 million on federal lobbying through June 30, 2026, and disclosed lobbying on the Prediction Market Act and the National Defense Authorization Act.
Provisions identified in the defence bill would restrict certain prediction-market transactions and prohibit bets on military operations.
Polymarket spent $180,000 on federal lobbying in 2026, while it had not registered any state lobbyists as of OpenSecrets’ reporting.
The Coalition for Prediction Markets, which includes Kalshi, Robinhood, Coinbase, Crypto.com and Underdog, has also engaged federal lobbyists.
In Europe, EL believes that a country-by-country approach is required first, given how different regulatory frameworks are across each Member State.
Only when the details are ironed out on a national level can an international discussion lead to a tangible Europe-wide strategy, the organisation added.
The division in regulatory views was on display at the Global Prediction Markets Forum during the SBC Summit Lisbon, with figureheads from Kalshi, WagerWire, and Gibraltar’s and Malta’s governments in attendance.
For Kalshi, a state lobbying presence may prove useful if the Supreme Court ultimately leaves states able to regulate prediction markets as gambling.
The immediate uncertainty is whether federal commodities law preempts state gambling rules.