Prediction market platform Kalshi has appointed Democratic strategist Stephanie Cutter as a policy adviser, balancing its earlier hire of Donald Trump Jr., as the industry faces simultaneous legal challenges from US states and the federal government.
Bipartisan Lobbying for a Contested Industry
Kalshi, the regulated prediction market platform, has appointed Stephanie Cutter as a policy adviser in a move that balances its political positioning across party lines. Cutter, a former senior strategist for President Obama and co-founder of communications firm Precision Strategies, joins a lobbying operation that already includes Donald Trump Jr., who was appointed as a strategic adviser in January 2025, one week before his father took office.
The dual appointments reflect the prediction market industry's strategy of building relationships on both sides of the aisle as it faces an increasingly complex legal landscape. Kalshi co-founder and CEO Tarek Mansour has described Cutter's role as helping the company deepen relationships in Washington and across the country.
Lawsuits from States and the Federal Government
The hiring comes at a critical moment for prediction markets. The industry is currently fighting legal battles on two separate fronts that could determine whether event contracts are classified as legitimate financial instruments or illegal gambling.
At the state level, multiple US states have filed lawsuits against Kalshi and competitor platforms, arguing that prediction market event contracts — which allow users to bet on outcomes ranging from election results to geopolitical events — constitute illegal gambling under state law. These cases test whether existing gambling statutes apply to contracts traded on federally regulated exchanges.
At the federal level, the picture is more unusual. Under CFTC nominee Michael Selig, the Commodity Futures Trading Commission has asserted exclusive jurisdiction over prediction markets and filed its own lawsuits — not against the platforms, but against state gaming regulators. The CFTC's position is that event contracts fall under federal commodity futures regulation, pre-empting state-level gambling laws. This creates a rare dynamic where a federal regulator is actively defending an industry against state-level enforcement.
Insider Trading Concerns
The legal challenges are compounded by growing political scrutiny. Congressional Democrats have called for closer oversight of prediction markets following reports of suspicious trades related to geopolitical events, including what some lawmakers described as unusual activity ahead of policy announcements on Iran.
Kalshi and rival platform Polymarket responded in March by announcing safeguards designed to prevent insider trading on their platforms. The measures were widely seen as pre-emptive, aimed at heading off potential legislation. Some lawmakers have proposed bills that would ban politicians from betting on prediction markets, though as of early April no such legislation had been signed into law.
A Maturing Industry Under Pressure
Prediction markets have grown rapidly since the 2024 US presidential election cycle, which saw record volumes on both Kalshi and Polymarket. The platforms offer event contracts on an expanding range of outcomes including politics, sports, economic indicators, and current events, positioning themselves as tools for price discovery and risk management rather than gambling.
The industry's core legal argument rests on the distinction between regulated exchange-traded contracts and unregulated wagering. Kalshi, which holds a licence from the CFTC to operate as a designated contract market, points to its regulatory status as evidence that its products are financial instruments rather than bets. Critics counter that the practical experience of most users — placing money on the outcome of an election or sporting event — is indistinguishable from gambling regardless of the regulatory wrapper.
Cutter's appointment signals that Kalshi expects the political dimension of this fight to intensify. Her background in Democratic political strategy complements Trump Jr.'s Republican connections, giving the platform access to both parties as Congress debates whether and how to regulate prediction markets. The outcome of the pending state and federal lawsuits will likely shape the industry's regulatory framework for years to come.
