Kalshi’s CEO made a pointed claim on CNBC. The wave of state lawsuits against his company isn’t really about consumer protection, but the traditional gambling industry using regulators to fight off a competitive threat.
A CNN investigation, built on nearly 20 sources, describes something closer to a genuine two-sided war with real money, real casualties, and real complications on both sides.
The numbers here are concrete and current. The gambling industry, comprised of the American Gaming Association and individual casino operators, has spent at least $3.3 million on federal lobbying this year, according to CNN.
For its part, CNBC reports Kalshi’s own lobbying spend at between $990,000 and $1.8 million once outside firms are included — a figure that nearly matches the AGA’s own total spend. This is a real, mutual lobbying arms race.
Derek Stevens, who owns three Las Vegas casinos plus the Circa Sports sportsbook operation across seven states, gave CNN an on-the-record assessment that leaves little ambiguity about how at least part of the traditional industry views this:
“A couple nerds came up Both sides are running real, named advocacy and ad campaigns against each other
with this idea to avoid paying taxes… These are thieves. They’re pirates. They’re marauders.”
This isn’t just rhetoric; Stevens has real numbers behind it. He told CNN that Circa Sports has seen a 35% drop in sports betting handle (total amount wagered) this year, which he directly attributes to prediction markets pulling bettors away.
Earlier reporting established that 44 states urged the CFTC in July to crack down on prediction markets, collectively describing them as “a new form of casino.” A New York Times report adds a specific, consequential detail:
“AGA lobbyists worked behind the scenes to connect state attorneys general, while rallying support.”
If accurate, that means the traditional gambling industry didn’t just react to state concern, it helped organize it.
To be clear the opposition to prediction markets is much broader than just the casino industry, and treating it as purely casino-driven would be its own kind of oversimplification.
CNN’s reporting is explicit that pushback also comes from “44 of 50 state attorneys general, dozens of Indian tribes, consumer advocates, addiction experts, and an increasingly bipartisan contingent on Capitol Hill”.
This is a genuinely wide coalition with independent reasons of their own, from lost gaming tax revenue (which reportedly generated nearly $18 billion for states last year) to real addiction and insider-trading concerns.
Some prediction-market allies have reportedly pushed back on this by suggesting anyone opposing the industry is simply doing the casino lobby’s bidding. CNN’s own reporting suggests that framing understates how much independent opposition genuinely exists.
Four tribal nations, including the Ho-Chunk Nation of Wisconsin, have sued Kalshi and Robinhood in federal court. The suit isn’t based on the same “is this gambling” theory used elsewhere.
The tribal action specifically alleges violations of state-tribal gaming compacts, a distinct legal framework tied to tribal sovereignty and existing exclusive gaming rights.
The Indian Gaming Association has built a $2 million legal defense fund for this fight specifically, and has reportedly described prediction-market-aligned Super PAC spending potentially reaching $500 million around the 2026 midterms.
The fight has moved well beyond lobbying disclosures into open public messaging war. An anti-Kalshi advocacy group called FairPredicts ran an ad campaign under the tagline “Kalshi Lies,” with funding sources that reportedly haven’t been fully disclosed.
Kalshi responded by sending FairPredicts a cease-and-desist letter. Kalshi, for its part, has its own advocacy organization, Americans for Fair Markets, running its own counter-messaging. This is a genuine, two-sided public relations conflict, not one side quietly lobbying while the other campaigns publicly.
Back in 2024, when Kalshi’s own lawyers were fighting in court to legalize election prediction markets specifically, they reportedly told federal judges directly that they believed Congress intended to prohibit sports-related prediction markets.
That’s a direct contradiction of Kalshi’s current position defending sports-related contracts as legitimate financial instruments. Multiple courts, including the Ninth Circuit, have reportedly noted this discrepancy directly.
Whatever the merits of Kalshi’s current legal theory, its own prior legal filings complicate a clean, principled version of that argument.
The scandals fueling this fight aren’t all coming from the casino side of the ledger. A staffer serving as a teleprompter operator for President Trump was fined $172,539 for using material, non-public information to place trades on Kalshi.
Separately, the Wall Street Journal has reported on politically-connected trading activity that may have relied on inside information. These stories are adding real pressure to the broader regulatory conversation independent of the casino-industry lobbying fight.
The NFL has also entered this dispute directly. The league’s chief compliance officer reportedly wrote to prediction market operators objecting to certain contract categories, stating it’s “deeply concerning that bets within the objectionable categories that we identified months ago have been and continue to be listed as contracts on exchanges.”
A major professional sports league raising direct, formal objections is a genuinely different kind of pressure than lobbying spending or state litigation.
Industry insiders and state regulators have reportedly expressed a specific, forward-looking worry to CNN. Prediction markets could eventually expand into contracts that are functionally identical to casino games themselves, such as betting on the outcome of a roulette spin, a hand of blackjack, or offering something like digital slot machines dressed up as prediction contracts.
A federal judge in Connecticut has reportedly raised this same concern directly in a recent ruling against Kalshi suggesting this isn’t just industry paranoia, but a concern with some judicial traction behind it.
In August 2026, the Ninth Circuit Court of Appeals ruled directly against Kalshi, finding its sports contracts are gambling, not federally-regulated “swaps”. This ruling directly contradicts an earlier Third Circuit decision favoring Kalshi in New Jersey.
That’s a genuine circuit split which may ultimately lead to Supreme Court involvement. In fact, New Jersey formally petitioned the Supreme Court on September 2, 2026, specifically asking it to resolve the split.
Nevada is also where enforcement has gotten most contentious, with regulators currently seeking a $120,000-per-day contempt penalty over a dispute about whether Kalshi has actually complied with geofencing requirements.
None of this resolves the underlying legal question as to whether prediction markets are genuinely gambling or genuinely financial instruments. This question is still being fought out state by state.
What this does show is that the fight isn’t a simple story with one villain. It’s a genuine, two-sided, well-funded battle. An established industry defending real, measurable business losses and a new entrant trying to avoid being regulated the same way.
All of this layered underneath a much broader coalition of states, tribes, and advocates with their own independent, non-financial reasons for concern. Untangling how much of the current wave of enforcement reflects genuine consumer-protection concern versus industry self-interest, on either side, is a legitimate, live question.
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