Prediction Markets Fight Gambling Labels in U.S. Regulatory Battle
Kalshi and Polymarket are lobbying U.S. regulators and donating to political action committees to be classified as financial exchanges rather than gambling platforms.
Prediction market platforms Kalshi and Polymarket are engaged in a legal and political effort to be classified as regulated financial exchanges. This distinction is critical for their operations in U.S. states like Texas, where strict laws prohibit sports betting and gambling.
To influence regulatory outcomes, Kalshi founders donated $200,000 to a Texas-focused political action committee following state hearings on the matter. The industry maintains close ties to the Trump family, with Donald Trump Jr. serving as a paid adviser to both companies and acting as a lead investor in Polymarket through his venture capital firm, 1789 Capital.
While the platforms have sought mainstream legitimacy through partnerships with CNN, CNBC, and Fox, election officials have raised alarms. Officials warn that these markets could sow chaos during upcoming midterm elections through misleading social media updates or intentional market manipulation.
