Lobbying Battle Intensifies Between Prediction Markets and Gaming Industry in Washington

A lobbying arms race between Kalshi, Polymarket and the casino and gaming sectors is unfolding in Washington, with all sides vying to win over lawmakers amid increasing scrutiny of prediction markets from Congress and regulators.

Kalshi's lobbying spending totaled $990,000 during the first half of 2026, according to filings this week, and nearly $1.8 million when including outside firms it's hired. That's more than the total $1 million the company spent on lobbying for the entirety of 2025 and marks the highest six-month spending to date for the company.

But the gambling and casino industry, which is fighting the rise of prediction markets, is also spending more on Capitol Hill.

The American Gaming Association, a gambling industry group, spent $1.39 million so far in 2026 on lobbying efforts, pacing ahead of what it spent in 2025. When including outside firms, the group has spent nearly $1.8 million on federal lobbying, 30% more than it spent in the first half of 2025. Cherokee Nation — which has casinos and other gaming interests — has spent $600,000 in the first half of 2026, also pacing ahead of its 2025 spending.

A firm that lobbies on behalf of Kalshi's chief rival, Polymarket, has spent $180,000 on its client in the first half of 2026, a figure that puts it on pace to match the $360,000 spent in 2025. Polymarket's footprint on Capitol Hill is smaller than that of Kalshi's. The former uses just one firm lobbying, while the latter has seven including its in-house firm.

Still, prediction markets say they face an uphill battle when it comes to getting lawmakers' attention. That's due in part to the fact that the casino and gambling industry has had a head start, according to Patrick McHenry, a former Republican congressman who is now senior advisor to the industry group Coalition for Prediction Markets — which represents five companies, including Kalshi.

"So much of the existing infrastructure of engagement on the Hill and at the states has been by the casino industry," he said in an interview. "The prediction markets are a new entrant into the policy debate in Washington, and are making great strides at communicating with lawmakers."

Kalshi declined to comment, deferring to McHenry.

Lawmakers have introduced a flurry of bills this year to address insider trading on prediction markets and seek to restrict event contracts on topics including sports, elections and acts of war. Sports contracts make up the largest segment on the platforms.

Prediction markets argue those sports-related event contracts are swaps, similar to financial market swaps like contracts for gold or corn, and therefore should remain regulated by the Commodity Futures Trading Commission. Critics of the companies' sports offerings argue those markets simply amount to sports betting, which is typically regulated by states.

That tone was echoed by senators at a commerce committee hearing in May, when a bipartisan chorus said those contracts amounted to nothing more than gambling. At a Tuesday hearing on sports-related event contracts hosting by a House Agriculture Committee subpanel, Rep. Dusty Johnson, R-S.D., cast a more conciliatory tone.

"To many Americans, these products look an awful lot like sports betting. To others, they're an innovative financial product that can help aggregate information and provide insights into future events," he said. "Drawing that line and determining whether our laws and regulators are equipped to do so is the central driving question before us today." He added, though, that the CFTC is not a gambling regulator.

Legislation unlikely in 2026

Prediction markets legislation is unlikely this year as Congress speeds towards the November elections, but companies are keeping an eye out for the possibility that a small proposal could be tucked into a broader legislative package before the end of the year.

TD Cowen policy analyst Jaret Seiberg said all eyes remain on the CFTC, the federal regulator for event contract exchanges. The CFTC in June released its proposed rule for prediction markets and is currently in a public comment period regarding that first draft.

And while prediction markets continue to face tough rhetoric from lawmakers, Seiberg said the lack of legislative action is exactly what the platforms want.

"If you're these companies, you really don't want Congress to do anything," he said. "And right now, Congress isn't doing anything. So they seem to be on the winning side of this lobbying fight."

Prediction markets also remain under scrutiny over their efforts to police insider trading, following an investigation launched by House Oversight and Reform Committee Chairman James Comer, R-Ky.

But a person familiar with the committee's investigation said the two platforms had different receptions when they recently briefed the committee. The person, who requested anonymity to disclose details about the investigation, said Kalshi's briefing was well received. Polymarket's drew more scrutiny because the company elected to send outside counsel rather than representatives for the company to the briefing.

A Polymarket spokesperson said that decision stemmed from a misunderstanding and that the company is eager to move forward from the incident. The spokesperson added the company "remains committed to continued collaboration and transparency" with the committee.

Kalshi was also set to brief the committee this week, the person familiar with the committee's investigation said, about Trump's former teleprompter operator making trades on "mention markets" — contracts where speculators place trades on whether a person will say a certain word in an event or speech — using material, nonpublic information on the platform. The company is expected to explain how its policies caught Gabriel Perez making those trades, the person said.