Prediction markets are financing the politicians who will decide whether they are gambling

Kalshi, Polymarket and their founders have contributed at least $5mn to Republican and Democratic political groups during the current US election cycle. Republicans received about $2.7mn and Democrats the remainder. More than one-third went to state-level groups supporting candidates for governor, attorney general and legislatures—the offices most directly involved in deciding whether sports and event contracts are gambling or federally regulated derivatives.

The spending is bipartisan but strategic. Kalshi's co-founders and other executives have given more than $1.6mn to campaigns and political-action committees. Kalshi has separately spent $1.79mn on lobbying this year, including $1.28mn through outside firms. Polymarket spent $270,000 on outside lobbyists and made a previously undisclosed $1mn payment to a Democratic nonprofit that does not reveal its donors, according to a remittance document reviewed by Reuters. A new industry PAC backed by Kalshi, Robinhood, Coinbase, Crypto.com and Underdog has spent another $200,000.

This remains small beside political spending by cryptocurrency or established sports-betting companies. The relevant comparison is the industry's own past: Reuters calls it the first significant prediction-market foray into campaign finance. The money arrives as states, Native American tribes and gaming authorities sue to block contracts they regard as unlicensed wagering, while federal lawmakers raise concerns about insider trading and national security. The platforms argue that the Commodity Futures Trading Commission has exclusive jurisdiction.

The legal question should be decided on statutory authority and the properties of the contracts, not on which side assembles the more effective donor network. Political spending is lawful and Kalshi says its giving reflects bipartisan relationships. Yet the distribution reveals the pressure points: federal officials can define the regulator; state officials can litigate and enforce. Prediction markets sell themselves as mechanisms that aggregate dispersed information. Their own spending is a market signal too—regulatory classification is now valuable enough to justify building a political constituency around it.