Catenaa, Wednesday, May 27, 2026- Prediction market platform Kalshi has backed the launch of a new advocacy organization aimed at defending federally regulated prediction markets in the US, intensifying the political and regulatory battle surrounding crypto-linked betting platforms ahead of the 2026 midterm elections.
The organization, called Americans for Fair Markets, announced Friday that former White House Deputy Chief of Staff Taylor Budowich will serve as a strategic adviser. The group said it plans to counter pressure from casino and sportsbook operators that oppose the expansion of prediction markets.
Kalshi, which operates under Commodity Futures Trading Commission oversight, said prediction markets should remain open, regulated and federally supervised rather than treated as state-level gambling operations.
Political Pressure Builds
The launch arrives during escalating legal and political disputes involving prediction markets across the United States.
Several state regulators have argued that sports-related event contracts offered through prediction market platforms resemble illegal gambling products under local laws.
CFTC Chair Michael Selig has continued asserting federal authority over regulated prediction markets, creating a growing jurisdictional clash between federal agencies and state gaming regulators. The advocacy group said it supports tighter rules against insider trading and wants restrictions preventing markets tied to war, assassination, terrorism or death-related events.
Insider Trading Scrutiny
Concerns surrounding insider trading have sharply intensified in recent months.
House Oversight Committee Chairman James Comer launched a congressional investigation Friday into Kalshi and Polymarket, demanding documents detailing identity verification systems, suspicious trading detection and geographic restrictions
The probe followed multiple controversial cases tied to geopolitical prediction markets.
Authorities earlier arrested a US Army soldier accused of using inside information connected to Venezuelan political developments to place profitable trades on Polymarket.
The incident increased calls for tighter oversight over markets involving government activity, military actions and elections.
Prediction Market Growth
Prediction markets expanded rapidly following the 2024 US presidential election as retail traders increasingly used platforms such as Kalshi and Polymarket to speculate on political outcomes, economic events and global developments.
Trading volumes on major platforms surged into the billions of dollars, while firms attracted growing interest from investors, political analysts and hedge funds.
The Coalition for Prediction Markets, another industry advocacy organization backed by Kalshi, Coinbase and Robinhood, has also increased lobbying activity in Washington. Former Republican Congressman Patrick McHenry and former Democratic Congressman Sean Patrick Maloney currently help lead that effort.
Regulatory Risks
Industry observers said the next two years may determine whether prediction markets evolve into a mainstream federally regulated financial product or face tighter restrictions resembling gambling regulation.
Federal regulators increasingly view prediction markets as part financial instrument and part speculative wagering system, complicating oversight frameworks.
Analysts said insider trading concerns could become one of the biggest long-term threats facing the industry if platforms fail to prevent politically connected traders or government insiders from exploiting sensitive information.
Prediction markets have existed for decades but remained relatively niche until blockchain infrastructure and online trading platforms dramatically expanded retail access. Early platforms focused mainly on elections and sports outcomes, but modern prediction markets now cover interest rates, wars, inflation, elections and corporate events.
Regulators historically struggled to classify prediction markets because they operate between gambling, derivatives trading and financial forecasting. The Commodity Futures Trading Commission increasingly views regulated event contracts as derivatives products, while many states continue classifying them as gambling.
The sector accelerated sharply after the 2024 US election cycle when traders increasingly treated prediction markets as alternative forecasting tools. Platforms such as Kalshi and Polymarket became influential sources for political probability tracking, attracting billions of dollars in speculative trading volume. That growth also triggered rising concerns surrounding insider trading, market manipulation and the ethical risks of betting on wars, assassinations and geopolitical crises.
