Kalshi is arguing that prediction markets belong under federal commodities law while spending heavily to influence the state officials most likely to treat them as gambling. OpenSecrets reporter Claire Cleary documents a campaign operating on both levels at once: federal preemption in court, political access wherever state gambling rules are made or enforced.
The jurisdictional argument is central to the product. Kalshi and other platforms describe event contracts as swaps regulated by the Commodity Futures Trading Commission. Many states see sports and other event contracts as wagers, which would make them subject to state licensing, age limits, taxes and consumer protections. Federal judges have split on whether state law applies, leaving the issue unresolved and potentially headed to the Supreme Court.
Meanwhile, the platforms are building influence around that dispute. Cleary reports that Kalshi, Polymarket and the Coalition for Prediction Markets have spent at least $3 million on lobbying and campaign contributions in 2026. In the first half of the year, Kalshi gave $147,500 to the Republican Attorneys General Association and $170,000 to its Democratic counterpart. It also gave a combined $250,000 to the two major governors’ associations.
Those contributions reach institutions whose members are resisting the company’s position. In July, 44 state attorneys general signed a letter calling prediction markets a “new form of casino.” Kalshi also made direct contributions connected to several attorneys general, while Donald Trump Jr.—an adviser with financial interests in both Kalshi and Polymarket—reportedly urged Republican attorneys general not to fight the platforms.
The lobbying footprint is broader still. By September, Kalshi had registered lobbyists in 41 states, nearly all hired since April. It spent $62,000 in California during the first half of 2026 and is projected to spend more than $400,000 in New York through July 2027. At the federal level, it spent nearly $1 million through June, opened a Washington office and retained six outside firms.
This is not just a fight over terminology. State gambling regulation can limit where a product is offered, who can use it and what safeguards and taxes attach to it. Federal classification as a swap offers a route around that state-by-state system. Brad Lipton of the Roosevelt Institute told OpenSecrets that it is unclear whether the business model can compete while complying with state law.
The reporting also shows why “regulated” is an incomplete description. The CFTC has sued states attempting to enforce their gambling laws, an intervention Lipton called unprecedented. At the same time, former officials and political operatives now work for the platforms and their coalition. The industry’s spending is bipartisan because the regulatory leverage is bipartisan.
Customers bear the practical consequences of that contest. A platform allowed to operate as a financial exchange can offer gambling-like contracts without the same age rules, local oversight or public obligations imposed on sportsbooks. The political campaign is therefore part of the product design: which regulator wins determines which protections the platform can avoid.