PoliticsApr 25, 2026
The Prediction Market Crackdown Is Here and the Industry Is Spending Millions to Stop It
Washington Watch
Victor Lei
Discover
A US service member faces historic insider trading charges for betting on his own mission to capture Nicolás Maduro. It's the case that finally forced Washington's hand on prediction markets.
Lawmakers have introduced more than a dozen regulatory bills since January, including proposals that would ban select elected officials from these platforms entirely, per the same reporting.
The White House sent a staff-wide email on Mar. 24 warning against using government access for market bets, one day after Trump announced a pause on Iran strikes via Truth Social.
~$760M in oil futures changed hands in under two minutes before that policy shift went public, per Dow Jones Market Data.
Three anonymous Polymarket accounts earned over $600K on correctly timed ceasefire bets. A separate trader netted more than $400K betting on Maduro's removal hours before his capture, according to The Wall Street Journal.
Sen. Richard Blumenthal called it plainly: prediction markets "are turning war into a casino game, and creating a market for national security leaks."
Prediction markets generated $2B in annual revenue by Dec. 2025, with analysts at Citizens Financial Group forecasting a climb to $10B by 2030.
Kalshi hit a $22B valuation in a Mar. 2026 funding round, roughly double its value from just three months prior. It has overtaken rival Polymarket in global trading volume, per the same Bloomberg report.
Prediction market firms spent $1.84M on lobbying in Q1 2026, up more than 60% from $1.1M in the same quarter last year, per Lobbying Disclosure Act filings.
"The policy landscape has rapidly evolved just in the last two or three months," said Ronak D. Desai, a Paul Hastings partner focused on white-collar defense. "Prediction markets have moved from the periphery to the center of congressional scrutiny."
Kalshi leads the charge, adding Resolution Public Affairs, wired to Senate Minority Leader Chuck Schumer, and Squire Patton Boggs to its roster since January. DraftKings and FanDuel also ramped up, spending $290K and $380K respectively in Q1 2026.
"Right now, prediction markets are the advocacy topic du jour," said Cody Carbone, CEO of crypto lobbying group Digital Chamber. Digital Chamber stood up a working group at member firms' request.
The Commodity Futures Trading Commission (CFTC) sued Arizona, Illinois, and Connecticut, asserting exclusive federal jurisdiction over Kalshi and similar platforms under the Commodity Exchange Act.
States are pushing back hard. Attorneys general from 39 states — crossing party lines — signed a brief backing Nevada's legal challenge against Kalshi, per the same Wall Street Journal report.
Donald Trump Jr. has invested in Polymarket through his venture capital firm and serves as a strategic adviser to Kalshi. That gives both platforms White House proximity even as the legal walls close in.
