The case of Blanche Lincoln reveals the political and legal shift accompanying the expansion of prediction markets in the United States. In 2010, Lincoln, then a member of the Senate and chair of the Agriculture Committee, warned that contracts tied to events such as the Super Bowl, Kentucky Derby, and Masters could become bets serving no genuine commercial purpose. Today, her company, Lincoln Policy Group, works for Kalshi and advocates allowing these contracts and placing them under federal oversight rather than state gambling laws.
Lincoln’s company has received $480,000 from Kalshi since 2024 for lobbying work before Congress and the Commodity Futures Trading Commission (CFTC). The company says its current position is based on the possibility of using prediction markets for legitimate financial purposes, and that sports contracts may have economic value because of sports’ impact on advertising, apparel, and the hospitality sector.
Preventing Betting Was Part of the Law’s Design
Lincoln was one of the authors of Title VII of the 2010 Dodd–Frank Act, which granted the CFTC broad authority over derivatives and event-based contracts. During debate on the law, she said the commission should have the ability to bar contracts whose primary purpose was to enable gambling through futures markets.
That authority was later reflected in Rule 40.11, which prohibits registered entities from listing contracts related to terrorism, assassination, war, gambling, or activity illegal under state or federal law, while granting the CFTC discretionary authority to review contracts. Legal experts say the commission’s position changed during Donald Trump’s second administration, as it allowed sports contracts to grow without formally repealing the rule.
Kalshi at the Center of a Federal–State Dispute
Kalshi launched sports betting contracts on January 23, 2025, while Crypto.com began offering similar contracts in December 2024. Since then, several states have sued Kalshi and Polymarket, arguing that sports contracts are bets subject to state laws, not financial derivatives protected exclusively under the CFTC’s jurisdiction.
The U.S. government filed lawsuits against nine states, including New York, Minnesota, Ohio, and Kentucky, alleging a violation of the commission’s exclusive jurisdiction. In response, dozens of states joined the opposition to this approach, citing issues involving the protection of minors, taxes, and the reduction of the effects of compulsive gambling. Appellate courts have also issued conflicting rulings: a ruling in the Third Circuit limited New Jersey’s ability to regulate these contracts, while the Ninth and Sixth Circuits allowed Nevada, Ohio, and Tennessee to enforce their gambling laws.
Why Does This Dispute Matter to Prediction Markets?
The disagreement is not limited to sports betting. Contracts have expanded to cover election results, appearances by individuals on television programs, Supreme Court rulings, public-health data, and video game release dates. The CFTC says trading volume in the prediction markets registered with it exceeded $25 billion during 2025, while the average number of contracts listed daily on one market rose from approximately 1,600 in April 2025 to 162,000 in April 2026.
This expansion makes it more difficult to distinguish between a financial contract used for hedging or forecasting and an entertainment bet. It also raises questions about conflicts of interest, trading based on inside information, and the limits of consumer protection when platforms operate beyond local oversight.
What Remains Unresolved?
The lawsuits center on two questions: Are sports contracts “swaps” under the definition in the Dodd–Frank Act, and does that give the CFTC authority to prevent states from enforcing their own gambling laws? New Jersey has asked the U.S. Supreme Court to resolve the split among the appellate circuits, while 39 states and the District of Columbia filed a brief supporting the Court’s review of the case.
As for Lincoln’s position, it has shifted from calling for a ban on sports contracts with no commercial purpose to advocating that the CFTC leave the value of contracts to the markets. She still supports banning certain contracts, such as those directly tied to terrorist attacks, assassinations, or military operations. But the shift in her position remains part of a broader debate over whether prediction markets are new financial tools or gambling platforms seeking to bypass local regulation.