Key Summary
- Kalshi founded the AFM (Advanced Factors Assistance) initiative, with former White House Deputy Chief of Staff Budowich as an advisor, to counter lobbying from casino operators.
- On the same day, the House of Representatives launched an insider investigation into Kalshi and Polymarket, demanding that records be handed over by June 5th.
- Polymarket has recently been hit by a series of crises: $600,000 in contracts hacked, South Korea launches investigation, Taiwanese users arrested, and Minnesota passes legislation banning [something].
The market prediction industry is caught in a double bind: on one hand, a lobbying war for control of the narrative, and on the other, a compliance battle to respond to regulatory scrutiny. On May 22nd, both battles began simultaneously.
Kalshi announced the creation of Americans for Fair Markets (AFM), bringing in former White House Deputy Chief of Staff Taylor Budowich as a strategic advisor. Budowich previously served under Susie Wiles, overseeing White House communications, speechwriting, and cabinet affairs, before leaving his post last September.
John Bivona, Kalshi's head of government relations , stated :
"Millions of Americans have indicated that they want a regulated, open, and fair prediction market."
Casino operators fired the first shot; Kalshi retaliated as a team.
AFM's formation was very aggressive. An organization called FairPredicts spent a few days ago on a six-figure advertising budget to launch a media offensive against Kalshi in Washington. The backer of the organization is the American Gaming Association, led by former New Jersey Governor Chris Christie.
FairPredicts set up a website called KalshiLies.com, and Kalshi subsequently issued a cease and desist notice.
By 2026, Kalshi had spent nearly $500,000 lobbying Congress and the CFTC. The AFM, which claims to be "well-funded," is tasked with combating "interest groups that protect monopolies and spread lies," advocating for federal regulation of prediction market exchanges, supporting bans on insider trading, and opposing markets associated with war, terrorism, death, or assassination.
The essence of this lobbying battle is the allocation of regulatory power: should prediction markets be governed by the CFTC or by the various state regulatory agencies? Different answers lead to completely different fates.
Yes 81% · No 20%
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Polymarket's recent situation: hacked, investigated, banned
On the same day that AFM was established, James Comer, chairman of the House Oversight Committee, announced an insider trading investigation into Kalshi and Polymarket, sending letters to the two CEOs demanding that they hand over internal records on user authentication, suspicious transaction monitoring, and offshore market access control by June 5.
The immediate catalyst for the investigation was the case of U.S. Special Forces Sergeant Major Gannon Ken Van Dyke, who profited over $400,000 by betting on Polymarket using classified intelligence regarding the arrest of Venezuelan President Maduro, and was indicted on April 24. Furthermore, the timing of betting by over 80 Polymarket users in the hours leading up to the announcement of U.S. and Israeli military action against Iran is highly suspicious.
Polymarket's recent troubles extend beyond insider trading. On May 22, their UMA CTF Adapter smart contract was attacked, losing 5,000 POL every 30 seconds, resulting in losses exceeding $600,000. On the same day, the Korea Communications Standards Commission officially launched an investigation into whether Polymarket violated anti-gambling laws, potentially making South Korea the ninth country to ban the platform. In Taiwan, users have already been woken up by search engines related to betting on the local elections.
At the state level, Minnesota signed the nation's first law banning prediction markets on May 19, prompting the Trump administration to file a lawsuit. Currently, 13 states have taken an active enforcement or litigation stance against prediction markets.
On one hand, lobbying groups are being formed to advocate for compliance; on the other hand, congressional investigation letters have already been delivered to CEOs' desks. It seems the speed at which the market and industry are trying to comply with regulations cannot keep up with the speed at which they are being singled out.
Frequently Asked Questions
What is Americans for Fair Markets (AFM)?
AFM is a prediction market initiative founded with the support of Kalshi, and former White House Deputy Chief of Staff Taylor Budowich serves as its strategic advisor. It advocates for federal regulation of prediction markets (CFTC), supports banning insider trading, opposes markets related to war and assassination, and counters lobbying efforts by gaming operators.
What regulatory investigations are Polymarket and Kalshi facing?
The House Oversight Committee launched an insider trading investigation on May 22, demanding that the CEOs of the two companies hand over internal records by June 5. The catalyst was the indictment of U.S. Army Master Sergeant Van Dyke for allegedly profiting over $400,000 from Polymarket using classified information, with over 80 other users suspected of making advance bets on military operations.
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