In the same week that the U.S. House of Representatives focused on Kalshi and Polymarket, demanding explanations on how they prevent insider trading, Kalshi turned around and stepped into the lobbying arena, supporting the establishment of a new organization called Americans for Fair Markets, turning a regulatory tug-of-war that was originally hidden in compliance terms into a public narrative battle. This organization clearly stated its mission from the outset — to promote the policy formulation and legalization of prediction markets at the federal level, explicitly supporting CFTC regulation while emphasizing that it only backs "regulated platforms" that implement KYC, prohibit insider trading, and restrict markets related to violence or terrorism. More confrontationally, it accused the sports betting and casino industries of trying to maintain monopolistic positions by spreading misinformation about prediction markets to policymakers, translating the issue from "compliance" to "who has the right to define the rules." On one side stands the gambling and casino industries, which have already obtained licenses and have established regulatory frameworks in most jurisdictions, while on the other side is the prediction market platform, whose regulatory classification and licensing pathways are not yet fully clarified. Under the pressure of Congressional investigations, Kalshi bet on the lobbying organization, positioning itself on the side of the rule-making table with an "embrace regulation" posture, while the real contest is about who will write the future federal regulatory positioning and industry boundaries.

Kalshi Bets on Discourse Power

Amidst the unresolved regulatory classification, Kalshi did not confine its efforts to responding to inquiry letters but chose to push itself to the forefront of policy formulation. The Americans for Fair Markets organization it supports and endorses clearly defined its mission from the beginning: to promote the policy formulation and legalization of prediction markets at the federal level. This organization openly aligns with the CFTC regulatory path, emphasizing that it advocates for "regulated prediction markets" rather than gray businesses that skirt around the rules — it lists compliance elements point by point in its statements: the platform must implement KYC, prohibit insider trading, and restrict markets related to violence or terrorism, aligning with the logic of "identifiable users + accountable behavior" emphasized by regulatory agencies. More aggressively, this organization directly pointed its criticism at the sports betting and casino industries, accusing them of having a licensing advantage in most jurisdictions while spreading misinformation about prediction markets to policymakers to maintain their monopolistic status, framing the issue as a battle for discourse power between "prediction markets vs. traditional gambling."

To make this discourse battle resonate in Washington, Americans for Fair Markets invited former White House Deputy Chief of Staff and former Trump administration official Taylor Budowich to serve as a strategic advisor, bringing in a former high-ranking official familiar with executive and legislative processes, essentially sending a political signal to Congress and regulatory agencies: Kalshi is not just a new platform but part of a camp that knows how to tell compliance stories in the corridors of power. Especially against the backdrop of the House just launching an investigation into Kalshi and Polymarket, focusing on how they prevent and handle insider trading, this lobbying organization publicly declared, "supports CFTC regulation, supports KYC, opposes insider trading," effectively reframing the investigation's focus into a policy issue — whether the future federal regulatory framework will integrate prediction markets into compliant capital market tools or merely classify them under gambling licenses will determine whether Kalshi's "embrace regulation" packaging is seen as a constructive institutional proposal or as a carefully designed compliance defense.

Congress Looks into Insider Trading Suspicions in Prediction Markets

While Kalshi was reshaping its narrative through the "Americans for Fair Markets," another hand in the U.S. House of Representatives was already reaching out to frontline platforms. Recently, Congress launched an investigation into Kalshi and Polymarket, the public focus not on what specific markets these platforms offer, but rather on a more sensitive issue: how do they prevent and handle insider trading. Informants mentioned that the inquiry specifically targeted a gray area — whether there is a situation where non-public or sensitive information is used to place orders in prediction markets, and whether the platforms have established internal rules and processes sufficient to block such trades. Even though the details in related reports have not been fully disclosed, this mention directly connects prediction markets with one of the most painful red lines inherent in traditional capital markets.

As the House of Representatives included "insider trading" in the investigation scope, the industry was forced to switch from "innovation narrative" to "compliance script." For platforms like Kalshi, this means they must clarify in hearings and inquiries how to identify and stop insider trades while also publicly stating their acceptance of KYC, opposition to insider trading, and support for CFTC regulation through their involvement with Americans for Fair Markets. The pressure from the investigation effectively compels all participants to take a public position — whether prediction markets are willing to self-regulate according to capital market compliance standards or passively slide into the gambling regulatory basket. Amidst the uncertainty of regulatory classification and licensing pathways, this round of congressional investigation has become the first "attitude sieve," with those who are vague on insider issues more likely to be simply classified by lawmakers as subjects needing to be tightened or suppressed.

License Wars Between Casinos and Prediction Markets

Beyond attitude screening, the Americans for Fair Markets organization has directly pointed its criticism at licensed sports betting and casino companies — publicly accusing these traditional license holders of trying to maintain the existing monopolistic structure while spreading misinformation about prediction markets to policymakers. For casino groups that have already completed compliance and obtained clear licenses and regulatory frameworks in most jurisdictions, the license itself is a fortress: those classified as "gambling" must queue under state licensing quotas, physical venue requirements, and stringent scrutiny, while any new prediction platform that bypasses this pathway could be seen as a potential competitor that sidesteps licensing costs and directly takes a slice of the pie.

Therefore, the core of this debate revolves around whether prediction markets will be pulled into the existing gambling regulatory basket, or gain an independent regulatory track distinct from casinos. Once fully classified as gambling, future federal or state levels are likely to design entry thresholds that parallel those of sports betting, effectively blocking the vast majority of newcomers from obtaining licenses, while traditional casinos would extend their control over online speculative products by leveraging their established licensing advantages; however, if, as advocated by Americans for Fair Markets, regulation leads by the CFTC with conditions such as KYC, prohibition of insider trading, and restriction of certain sensitive markets, then prediction platforms may have the opportunity to operate within a compliance framework that is closer to capital markets, establishing parallel rather than subordinate licensing boundaries with casinos. This will determine who operates within the rules and who is excluded from them over the next decade.

Blueprint for Federal Regulatory Prediction Markets

In the narrative of the Americans for Fair Markets, "compliant prediction markets" are first broken down into several quantifiable regulatory conditions: the platforms must conduct KYC, ensuring all participants leave real identity records; the platform must prohibit insider trading at the rule level, excluding asymmetric information profiteering from the outset; the platform must also self-regulate, not opening markets on issues related to violence or terrorism, ultimately locking down the most sensitive public safety topics. These conditions, together, are packaged by the organization as "responsible market design," paired with a clear federal regulatory target — openly naming the CFTC as the regulator, placing prediction markets into a regulatory box that is closer to futures and options rather than gambling, instead of gambling in a regulatory vacuum.

Once this blueprint is established as the industry standard, the platforms' business models will have to shift from "free topics + user anonymity" traffic businesses to "compliance costs + licensing premiums" regulated businesses. KYC raises the user admission threshold, filtering out low-cost, multi-account gray traffic, compelling platforms to hedge the risk of a narrowed user pool with higher average revenue per user and more stable compliance expectations; prohibiting ins

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