Prediction Markets on the Line As State Gambling Laws Clash with CFTC

11 October 2026

A former senator once worked to block gambling through prediction markets. Now she's lobbying for one of the industry's biggest platforms.

Blanche Lincoln's policy reversal is a microcosm of a larger shift at play: prediction markets like Kalshi are attracting scrutiny from gambling regulators, even as the CFTC views them as financial products. Now, the two sides are duking it out in Washington and beyond.

Kalshi insists its platform is akin to a stock market, not a casino. It has spent at least $3 million in lobbying and campaign contributions at the federal and state levels, according to an Arkansas Advocate analysis of disclosures. Nearly $1 million of that went to federal lobbying from January to June 2026, and Kalshi has disclosed a presence in 41 states' capitols.

But a coalition of 44 state attorneys general branded prediction markets "a new form of casino" in a July letter to the CFTC. 23 states outright ban election betting. And some, like Arizona, have filed criminal charges against Kalshi.

New Legal Ground

The issue turns on whether prediction markets, like those operated by Kalshi, are gambling or financial products. It's a question that has roiled the industry since last year, with some states looking to write their own rules for a market that could balloon, valued as high as $325 million last year, a 65% increase from 2024 figures reported by Forbes.

For now, the CFTC has taken a favorable posture, allowing contracts to trade, even when they point to political outcomes. That's turned some state gambling regulators' heads. The regulators have filed criminal charges in some instances and come to the federal government for oversight.

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In a Supreme Court battle from 1926, the court sided with Congress to majorly ramp up efforts to regulate financial markets, arguing that national matters take priority over individual states. That's in direct contrast to the 1960s, when states were given the majority of regulatory oversight to govern lotteries and related gambling.

What's to Come

Even industry experts are split.

"You have different federal and state authorities, each vying to carve out the authority as best they can describe it," Cole Ward, an attorney specialized in gambling regulation, said of the two sides.

If nothing else, the jurisdictional quagmire isn't likely to go away, even if the battle wanes, given the size of the market and the amount Kalshi and other platforms have been willing to spend. Since January 2026, for example, Kalshi has donated $147,500 to the Republican Attorneys General Association and $170,000 to the Democratic Attorneys General Association. It's also put $100,000 into the Republican Governors Association and $150,000 into the Democratic Governors Association. That's in addition to the millions it's spent at the federal level.

And with Donald Trump Jr. as a strategic advisor, Kalshi has powerful allies in Washington, no matter the regulatory outcome.