The prediction market industry is no longer just fighting its battles in court. As companies such as Kalshi and Polymarket face increasing pressure from state governments, they are spending millions on lobbying and political efforts to influence industry leaders.
According to a recent OpenSecrets analysis cited by Stateline, Kalshi, Polymarket and the Coalition for Prediction Markets have spent at least $3 million this year on lobbying and campaign contributions at the state and federal levels.
The spending shows just how important the regulatory fight has become for prediction markets.
Kalshi Targets State Leaders
A significant portion of Kalshi's political spending has focused on governors and state attorneys general. Those officials have become some of the industry's biggest opponents as states attempt to determine whether prediction markets should fall under existing gambling laws.
OpenSecrets found that Kalshi contributed more than $300,000 combined to the Republican Attorneys General Association and Democratic Attorneys General Association. The company also gave $100,000 to the Republican Governors Association and $150,000 to the Democratic Governors Association during the first half of 2026.
The strategy is notable because Kalshi is not limiting its outreach to one political party. The company wants bipartisan support which is very smart.
Kalshi has also expanded its lobbying operation dramatically. OpenSecrets identified lobbyists working for the company in at least 41 states, including California and New York.
The Bigger Battle Is Over State Authority
The prediction markets dispute centers on classification. Kalshi and other operators argue that their event contracts are financial products regulated federally by the Commodity Futures Trading Commission.
States pushing back have argued that contracts tied to sports and other events function more like traditional sportsbooks and should be taxed accordingly.
If prediction markets remain exclusively under federal oversight, states could have limited ability to impose their own taxes, licensing requirements, and consumer protections. If states establish regulatory authority, prediction market operators could face many of the same requirements imposed on traditional sportsbooks.
The National Conference of State Legislatures described the federal-state conflict as a central question for the industry, with billions of dollars in potential tax revenue and consumer protection issues tied to the outcome.
Kalshi's political spending also extends to Washington. OpenSecrets found the company spent nearly $1 million on federal lobbying during the first half of 2026, targeting the CFTC, White House, SEC, and Congress.
That federal push comes as the CFTC has taken an aggressive position in defending its authority over prediction markets. The agency has even sued states that attempted to regulate the companies, further escalating the conflict between federal and state governments.
The Trade Handle Prediction Markets Take
The most important takeaway from the spending may be that prediction markets are preparing for a prolonged fight.
These companies are not simply trying to win individual lawsuits or defeat individual pieces of legislation. They are building political relationships across the country while simultaneously fighting regulators and state governments in court.
For an industry growing at the pace prediction markets are, the stakes are enormous. The rules set over the next few years could determine whether companies like Kalshi can operate nationally under a primarily federal framework or will eventually be ruled by the states.
The future of prediction markets is unknown, but a few things are certain. Prediction markets will fight hard to remain exchanges rather than sportsbooks. The end of the prediction market industry could come quickly if they fall under sportsbook legislation.