Carsi takes on polymarket message war as Congress considers regulations

In recent weeks and months, as proposals to rein in prediction markets proliferated on the floor of Congress, Mr. Carsi, one of the biggest players in the fast-growing industry, came to his defense.

The New York-based platform launched an ad campaign across Washington, rolling out mint green spreads on billboards, bus stops and inserts in the Washington Post. The ad seeks to redirect a series of criticisms being leveled at Kalsi and position it as different from another global industry giant, Polymarket.

The ads said, “We prohibit insider trading,” “We do not conduct death markets,” “We are not a house,” and “We operate under U.S. law.”

Building corporate influence in capital cities is a commonly used strategy. Prediction markets are a new player, and Calci and Polymarket are working to forge goodwill with Congress and regulators, who are growing concerned about insider trading and unseemly betting on the platform.

“There has been a lot of confusion between the two big players in prediction markets,” Elizabeth Diana, head of communications at Calsi, said in an interview. “There are very important differences between the two, and we want the public, and more importantly policymakers, to understand them.”

“Our focus is on building the best product, setting standards on these issues, and working with relevant regulators and law enforcement to draw the lines appropriately and enforce against the real bad actors,” Olivia Charos, Polymarket’s deputy chief legal officer, said in an interview. Charos declined to directly address Kalsi’s message.

Prediction markets like Kalshi and Polymarket have skyrocketed in popularity over the last year. This market allows users to purchase event contracts that essentially bet on the outcome of a specific event in a variety of areas such as sporting events, award ceremonies, and elections.

According to an April 8 Bank of America report, Kalsi dominates the U.S. prediction market, accounting for about 90% of the U.S. market share. Although Polymarket is a major global company, its footprint in the United States is limited.

Sports is the most popular event contract type based on volume. According to the Congressional Research Service, as of February, nearly 90% of bets placed on Calci last year were on sports. However, in some cases, users are able to bet on more controversial issues, leading to increased scrutiny.

A Polymarket user raised $400,000 in January by successfully ousting Venezuelan President Nicolas Maduro, raising concerns of insider trading. Subsequent bets on war with Iran and other government actions have alarmed lawmakers, who are rushing to legislate tighter restrictions on the platforms.

“By offering bets on wars, elections, and the actions of the U.S. government, prediction markets are a real danger to our democracy and ripe for abuse by public officials with inside information,” Sen. Jeff Merkley, D-Ore., said in a statement to CNBC. Merkley has introduced several bills aimed at more tightly regulating prediction markets.

“Education process”

Prediction markets are quickly starting to find an enemy. Casinos and sportsbooks claim they are operating as unlicensed gambling sites. Several states also issued cease-and-desist orders halting operations. Mr. Carsi won a landmark case last week in which a federal appeals court rejected New Jersey’s attempt to rein in the platform.

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

In 2025, Kalsi spent $615,000 on lobbying and Polymarket $360,000, according to OpenSecret, an organization that tracks U.S. political spending. This pales in comparison to the millions of dollars spent by top industry groups. Carsi opened a Washington office in January and named Biden administration alumnus John Bibona as his first government relations director. In April, Carsi added Stephanie Cutter, a former aide to Democrats, including President Barack Obama, as a policy adviser.

Kalsi is regulated by the Commodity Futures Trading Commission and does not allow users to place bets anonymously, a controversial feature of some platforms operating outside the United States, Diana said. Kalsi has a strong oversight and enforcement team, and earlier this year Kalsi made news when it suspended the editor of YouTube influencer Beast for allegedly engaging in insider trading and referred him to federal authorities.

Last month, amid growing concerns about insider trading on the platform, Kalsi announced voluntary guardrails to protect against illegal activity. On the same day, Polymarket announced that it would be tightening its own rules against insider trading.

Kalsi is not without controversy. In late February, the company allowed bets on whether Iran’s late supreme leader Ayatollah Khamenei would be ousted. Khamenei was killed on the first day of the US-Israel war on Iran, leaving bettors hoping for a payout.

Mr. Carsi ultimately ended up refunding all fees and net losses associated with the bets to bettors, citing federal regulations that prohibit bets on death.

The CFTC regulates prediction markets as “designated contract markets” that provide event contracts under the Commodity Exchange Act. The CFTC treats contracts provided by companies as “swaps,” a type of regulated financial transaction.

“These are derivatives markets, with a comprehensive set of regulations and protections for market integrity and consumer safety,” said Sean Patrick Maloney, a former House Democrat from New York who heads the Prediction Markets Coalition, a new lobbying group that includes Mr. Carsi.

Other coalition members include crypto.com, Coinbase, Robinhood, and Underdog. These are all US-based organizations that are regulated by the CFTC. It does not represent Polymarket.

Blockchain-based Polymarket is headquartered in New York and operated by a company licensed in Panama. Although its limited US platform is regulated by the CFTC, its international aspects are not overseen by US regulators.

Lawmakers’ concerns have primarily focused on companies like Polymarket, which operate outside the United States and are technically barred from allowing American users, some of whom gain access through workarounds such as virtual private networks or VPNs, which can be used to hide location information.

Asked about these concerns, Polymarket’s Charos emphasized the company’s internal ability to identify fraudsters.

“I think the idea of ​​anonymous transactions is a bit of a misconception. Blockchain provides the ability to collect a tremendous amount of information about an individual’s trading activity, and in many cases an individual can be identified,” Charos said, though he would not comment on whether anyone had been identified in bets made related to President Maduro or the Iran war.

Although Polymarket is not as open to the public as Karshi, it has begun developing its ground game in the capital.

The company opened a pop-up bar in downtown Washington in March that allowed revelers to access Bloomberg terminals and place bets while drinking, but the opening failed due to power issues.

“We are making a number of key hires that will expand our DC presence,” Chalos said. “We have third-party people working with us in Washington, D.C., and members of the company also spend time there.”

important differences

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

“Sometimes it seems like Washington is the last place to wake up to what millions of Americans have embraced and enjoyed, and it feels like there’s so much work for people to do,” Maloney said.

Congressional leadership has remained largely silent on the issue. Senate Majority Leader John Thune (D-La.) and House Speaker Mike Johnson (R-La.) did not respond to requests for comment on this story.

House Majority Leader Hakeem Jeffries of New York expressed enthusiastic support for Congressional oversight of the industry at a press conference in March.

“I think it makes sense to look at what can be done in this area and work with all the stakeholders in this area to try to find a bipartisan path forward,” Jeffries said.

But more and more lawmakers are joining the fray.

At least eight prediction market bills have been introduced since January. Some lawmakers specifically want to eliminate insider trading, while others, like California Democratic Rep. Adam Schiff and Utah Republican Rep. John Curtis, have banned sports prediction market contracts altogether.

Such a broad approach may be difficult to gain traction. But Sen. Todd Young (R-Ind.), who is among a small group of Republicans supporting legislation to regulate prediction markets, said Congress should move forward with a solution to insider trading on the platforms.

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

Rep. Nikki Budzinski (D-Ill.), who introduced her own version of the prediction market insider trading ban with Rep. Adrian Smith (R-Neb.), said she appreciates the relative transparency Calci provides by banning anonymous users.

Another important issue for many lawmakers is whether traders can bet on wars and military actions. This is prohibited in the US polymarket, but is possible in other parts of the world. Charos said Polymarket doesn’t think there should be a prediction market for deaths, but other war-related information could be invaluable to users.

“There are instances where users have contacted us and said, ‘We don’t believe the news reports. We watch the markets and are informed in real time… and we’ve made life-and-death decisions based on these markets and what’s in the media,'” Charos said.

The chances of the bill becoming law this year are “slim or zero”

Regardless of Mr. Carsi and Mr. Polimarket’s lobbying efforts, the enthusiasm surrounding prediction markets is unlikely to die down on the floor of Congress any time soon, even if the proposal is doomed to failure.

Sen. Chris Murphy of Connecticut, who sponsored a bicameral bill to ban government officials from profiting from prediction markets about wars and government actions, told reporters in March that the bill’s chances of gaining traction in this Congress were “nearly zero,” partly because of the politics of prediction markets.

Regulation of prediction markets has been a primarily Democratic issue in Congress so far, although there is some support from Republicans. And the Trump family has shown an active interest in prediction markets.

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

“I think we need to build grassroots support to end these corrupt prediction markets,” Murphy said. “But Donald Trump, his family is fully integrated and making money on calci and polymarkets.” Murphy said given the Trump family’s interests, he doubts the president would get Republicans to support legislation that could curb the profits of prediction markets.

In March, the Trump administration sent an email to all staff warning them against betting on Iran war in prediction markets, a White House official confirmed. White House press secretary Davis Ingle denied any wrongdoing by Trump administration officials and reiterated that insider trading is already illegal.

“President Trump wants a strong and profitable stock market for everyone, but he has made it clear that members of Congress and other government officials should be prohibited from using non-public information for financial gain,” Ingle said in an email in response to a question about the Trump family’s interests in prediction markets. “The only special interest guiding President Trump is the best interest of the American people.”

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

— Emily Wilkins contributed to this article.