With proposals to rein in prediction markets proliferating through the halls of Congress in recent weeks and months, Kalshi — one of the biggest players in the booming industry — went on defense.

The New York-based platform launched an ad campaign throughout Washington, rolling out mint-green spreads on billboards, bus shelters and inserts in The Washington Post. The ads seek to deflect the spate of criticism being hurled Kalshi’s way and to position it as different from Polymarket, the other global industry giant.

“We ban insider trading,” “We don’t do death markets,” “We aren’t the house,” “We operate under U.S. law,” the ads read.

The companies are looking to get ahead of lawmaker concerns about insider trading and bets placed on things like war-related deaths.

Building corporate influence in the capital city is a well-used playbook. Prediction markets are a new player, and Kalshi and Polymarket are working to create goodwill with Congress and regulators, who are raising concerns about insider trading and unseemly bets on the platforms.

“There’s been a lot of conflation between the two big prediction markets players,” Kalshi’s head of communications Elisabeth Diana said in an interview. “There are very big key distinctions between the two, and we want to make sure the public — and more importantly policymakers — understand the difference.”

“What we are focused on is building the best product, setting the standard on these issues and working with our relevant regulators and law enforcement to appropriately draw the lines and enforce against actual bad actors,” Olivia Chalos, deputy chief legal officer at Polymarket, said in an interview. Chalos declined to directly address Kalshi’s messaging.

Prediction markets including Kalshi and Polymarket have surged in popularity in the last year. The markets allow users to purchase event contracts — essentially, bets on the outcome of a specific event — on a variety of areas, including sporting events, awards shows and elections.

Kalshi dominates the U.S. prediction market space, accounting for roughly 90% of U.S. market share, according to an April 8 Bank of America report. Polymarket is a major global player but has a limited U.S. footprint.

Sports are the most popular event contract type by volume — as of February, almost 90% of bets made on Kalshi in the last year were on sports, according to the Congressional Research Service — though users in some cases are able to place bets on more controversial issues, which has led to increased scrutiny.

One user on Polymarket raked in $400,000 in January by correctly predicting the ouster of Venezuelan President Nicolás Maduro, raising insider trading concerns. Subsequent bets placed on the Iran war and other government actions have heightened the alarm of lawmakers, who are scrambling to legislate tougher restrictions on the platforms.

“By offering bets on wars, elections, and U.S. government actions, prediction markets are a real danger to our democracy and ripe for exploitation by public officials with insider information,” Sen. Jeff Merkley, D-Ore., said in a statement to CNBC. Merkley has introduced multiple bills seeking to more strictly regulate prediction markets.

Prediction markets are quickly finding opponents. Casinos and sportsbooks argue they operate as unlicensed sites for gambling. And several states have issued cease and desist orders to halt their operation. Kalshi won a key case last week when a federal appeals court slapped down an attempt by New Jersey to curb the platform.

In Washington, lawmakers are just waking up to how the industry works.

Kalshi spent $615,000 and Polymarket spent $360,000 on lobbying in 2025, according to OpenSecrets, an organization that tracks U.S. political spending. That pales in comparison with the double-digit millions spent by top trade associations. Kalshi opened a Washington office in January and tapped Biden administration alum John Bivona as its first head of government relations. In April, Kalshi added Stephanie Cutter, a former top aide to Democrats including President Barack Obama, as policy advisor.

Kalshi is regulated by the Commodity Futures Trading Commission and does not allow users to place bets anonymously, a contentious feature of some platforms that operate outside the U.S. Kalshi has a robust surveillance and enforcement team, Diana said, and made news earlier this year when the company suspended and referred to federal officials an editor for the YouTube influencer Mr. Beast who allegedly engaged in insider trading.

As insider trading concerns on the platforms heightened last month, Kalshi announced voluntary guardrails to protect against illegal activity. The same day, Polymarket announced it was tightening its own rules against insider trading.

Kalshi has not been without controversy. The company allowed bets in late February on whether the late Iranian Supreme Leader Ali Khamenei would be out of power. Khamenei was killed on the first day of the U.S.-Israeli war with Iran, and bettors were left expecting a payout.

Kalshi ended up refunding bettors all fees and net losses related to those bets, citing federal regulations that bar wagers on death.

The CFTC regulates prediction markets as “designated contract markets” offering event contracts under the Commodity Exchange Act. The CFTC treats the contracts the companies offer as “swaps,” a type of financial exchange it regulates.

“These are derivatives markets, and they come with a comprehensive set of regulations and protections for the integrity of the markets and the safety of the consumer,” said Sean Patrick Maloney, a former U.S. House Democrat from New York who runs the new lobbying group the Coalition for Prediction Markets, which includes Kalshi.

Other coalition members include crypto.com, Coinbase, Robinhood and Underdog — all entities based in the U.S. and regulated by the CFTC. It does not represent Polymarket. 

Blockchain-based Polymarket is headquartered in New York and run by an entity licensed in Panama. Its limited U.S. platform is regulated by the CFTC, but its international side is not overseen by American regulators.

Lawmakers’ concerns rest largely on companies such as Polymarket that operate outside the U.S. and technically bar U.S. users, some of whom find their way in through work-arounds such as virtual private networks, or VPNs, which can be used to hide their locations.

Asked about these concerns, Polymarket’s Chalos touted what she said was the company’s internal abilities to identify bad actors.

“I think there’s a bit of a misconception around this idea of anonymous trading. Blockchains afford the ability to gather an enormous amount of information about a person’s trading activity. In many instances, individuals are able to be identified,” Chalos said, though she would not comment on whether anyone was identified for bets placed related to Máduro or the Iran war.

While Polymarket has generally been less public-facing than Kalshi, it has started developing a ground game in the nation’s capital.

It unveiled a pop-up bar in downtown Washington in March, where revelers could access Bloomberg terminals and place bets alongside libations, though power issues led to a botched opening.

“We have a number of key hires in the pipeline, which will broaden our D.C. presence,” Chalos said. “We have third-party people we work with down in D.C., and then members of the company have been spending time down there as well.”

Congress cool to prediction markets’ pitch

These efforts to win hearts and minds have left Congress somewhat split.

“Sometimes it can seem like Washington is the last place to wake up to something millions of Americans have embraced and enjoy, and it feels like there’s a lot for people to do,” Maloney said.

Congressional leadership has been mostly quiet on the issue. Senate Majority Leader John Thune, R-S.D., and House Speaker Mike Johnson, R-La., did not respond to requests for comment for this story. 

House Minority Leader Hakeem Jeffries, D-N.Y., offered tepid support for congressional oversight of the industry during a press conference in March. 

“I do think it’s reasonable for us to take a look at what can be done in this space and try to find a bipartisan path forward, working with all of the stakeholders in this area,” Jeffries said.

But a growing number of lawmakers are entering the fray.

At least eight prediction market bills have been introduced since January. Several specifically seek to root out insider trading, while others, like one from Sens. Adam Schiff, D-Calif., and John Curtis, R-Utah, would bar sports prediction market contracts entirely.

Those broader approaches may have trouble gaining traction. But Sen. Todd Young, R-Ind., one of a small group of Republicans who have thrown their weight behind legislation to regulate prediction markets, said Congress should keep pushing on a solution to insider trading on the platforms.

“I don’t think that political concerns should prevent us from regulating what could fundamentally undermine trust in our system of government,” Young said.

Rep. Nikki Budzinski, D-Ill., who introduced her own version of a prediction market insider trading ban with Rep. Adrian Smith, R-Neb., said she appreciated the relative transparency Kalshi offered by banning anonymous users.

Another key issue for many lawmakers is the ability of traders to place bets on war and military actions, which is banned on Polymarket in the U.S. but is available elsewhere in the world. Chalos said Polymarket believes there should not be prediction markets on death but that other war-related information can be invaluable to users.

“There are instances where users have reached out to us and said, ‘We don’t believe what the news is reporting. We are getting our information in real time by looking at the markets … And we have made life-or-death decisions based on these markets versus what is out there in the media,” Chalos said.

‘Slim to none’ odds of legislation this year

Regardless of Kalshi’s and Polymarket’s lobbying efforts, the fervor around prediction markets is unlikely to die down in the halls of Congress anytime soon, even if the proposals may be doomed to fail.

Sen. Chris Murphy, D-Conn., who led a bicameral bill to ban government officials from profiting on prediction markets on war or government actions, told reporters in March that the odds of any legislation gaining momentum this Congress were “slim to none,” in part because of the politics of prediction markets.

Prediction market regulation has some Republican buy-in, but has so far been a largely Democratic issue in Congress. And the Trump family has taken an active interest in prediction markets.

The family media company announced last year it would open its own prediction market, Truth Predict. And Donald Trump Jr., the president’s oldest son, is an investor in and unpaid advisor to Polymarket, as well as a paid advisor to Kalshi.

“I think we need to build a grassroots constituency around ending these corrupt prediction markets,” Murphy said. “But Donald Trump, his family is completely integrated and making money off of Kalshi and Polymarket.” Murphy said that given the Trump family’s interests, he doubts the president would allow Republicans to support legislation that could curb prediction market profits.

The Trump administration in March sent a staff-wide email warning against placing Iran war bets on prediction markets, a White House official confirmed. Davis Ingle, a White House spokesperson, denied any wrongdoing by Trump administration officials and reiterated that insider trading is already illegal.

“President Trump has been crystal clear: while he seeks a strong and profitable stock market for everyone, members of Congress and other government officials should be prohibited from using nonpublic information for financial benefit,” Ingle said via email in response to questions about Trump family interests in prediction markets. “The only special interest that will ever guide President Trump is the best interest of the American people.”

Disclosure: CNBC and Kalshi have a commercial relationship that includes a CNBC minority investment.

— Emily Wilkins contributed to this story.

A group of congressional Democrats on Thursday introduced legislation that would ban prediction market bets on elections, government actions, war and sports, as scrutiny on the popular platforms intensifies.

Sens. Jeff Merkley, D-Ore., and Elizabeth Warren, D-Mass., and Rep. Jamie Raskin, D-Md., are leading the measure, which comes after a series of well-timed bets placed on world events — including the ousting of Venezuelan President Nicolas Maduro and the war in Iran — raised questions about prediction markets like Kalshi and Polymarket.

“When anyone can use prediction markets to make a well-timed bet on Congress passing a bill, government decisions, or a military strike, it’s ripe for corruption and erodes public trust,” Merkley said in a statement. “The STOP Corrupt Bets Act restores the original intent of prediction markets and prevents these markets from further eroding our democratic institutions and turning them into a casino.”

The bill, which would impose broader limitations on the markets than most other legislative measures, is the latest in a flurry of proposals to rein-in prediction markets, which have exploded in popularity of late and allow users to place bets on a variety of events.

Sens. Adam Schiff, D-Calif., and John Curtis, R-Utah, have teamed up on a measure to ban sports prediction market contracts, which they argue is tantamount to gambling and goes virtually unregulated.

Kalshi criticized Schiff and Curtis’ proposal in a statement to CNBC on Wednesday, saying, “It’s clear this bill is motivated by casino interests that are threatened by competition. They’re more worried about protecting their monopolies than protecting consumers.”

A bipartisan House group on Wednesday introduced legislation barring members of Congress, the president and other executive branch officials from trading in certain prediction markets. Merkley earlier this month, along with Sen. Amy Klobuchar, D-Minn., introduced his own proposal that would similarly block elected officials from getting rich off prediction markets.

As lawmakers turn up the heat, Kalshi and Polymarket both announced new insider trading protections on their platforms this week. Kalshi says it does not allow markets related to war or death.

Spokespeople for both prediction markets did not immediately respond to a request for comment Thursday morning.

In addition to an outright prohibition on specific prediction market activity, Merkley, Warren and Raskin’s latest proposal would clarify that these markets are against the intent of federal law that regulates contract trading and would return the power of regulating gambling to the states, according to Merkley.

At least 20 lawsuits have been filed by states and gaming regulators arguing that prediction markets offer a gambling loophole and should be state-regulated.

The new bill would also require that the Government Accountability Office — Congress’ non-partisan, independent watchdog — conduct a study on prediction markets and insider trading.

Disclosure: CNBC and Kalshi have a commercial relationship that includes a CNBC minority investment.