Former Senator Blanche Lincoln, a key architect of the 2010 Dodd-Frank Act, now lobbies for the prediction market Kalshi. Her firm has received $480,000 from Kalshi since 2024 to advocate for looser regulations on event contracts. While in the Senate, Lincoln argued that event contracts on sports served no commercial purpose and were merely gambling, a stance she initially maintained in a 2024 letter to the Biden administration.
The regulatory landscape shifted significantly with the second Trump administration. Kalshi launched sports betting on January 23, 2025, shortly after the inauguration. While the Biden-era CFTC enforced Rule 40.11 to prohibit gaming-related contracts, the current administration has ceased enforcement of this rule without formally repealing it. This change has allowed Kalshi and its rival, Polymarket, to expand their offerings despite ongoing legal challenges.
Currently, lawsuits in approximately 20 states are testing whether federal authority granted to the CFTC preempts state gambling laws. The conflict centers on whether prediction markets, which claim to operate like stock exchanges, are subject to federal law rather than state regulations. Some states have successfully challenged these markets in court, and the issue is likely to reach the Supreme Court for a final determination.
The industry maintains close ties to the current administration, with Donald Trump Jr. serving as an advisor to both Kalshi and Polymarket. Additionally, 1789 Capital, a firm where Trump Jr. is a partner, is a major investor in Polymarket. These connections and the current CFTC's permissive stance have enabled the rapid growth of sports-event contracts, drawing sharp criticism from state regulators and tribal gaming authorities.
