Policy Position
A Wall Street loophole is allowing corporations, foreign nationals, and anonymous offshore accounts to place financial bets on the outcome of American elections — and those bets are shaping the coverage, the polling, and the public perception of who is winning. This is not gambling. It is the purchase of democratic outcomes.
Mark Moran was the first to call this out publicly — in the New York Post on October 28, 2025, warning that foreign money from China and the Middle East was flowing into prediction markets to skew the odds in the New York City mayoral race. He was right. Now he is introducing legislation to end it.
How It Works
The Commodity Futures Trading Commission (CFTC) was created to regulate commodity futures markets — corn, oil, wheat. For decades, the CFTC explicitly prohibited event contracts on political outcomes, classifying them as contrary to the public interest under 7 U.S.C. § 7a-2(c)(5)(C)(i). The law was clear: you cannot turn elections into a casino.
Then Kalshi, a prediction market startup backed by venture capital and a former Goldman Sachs partner, sued the CFTC in federal court after the agency blocked its election contracts. In September 2024, the U.S. Court of Appeals for the D.C. Circuit ruled in Kalshi's favor, holding that the CFTC had not adequately justified its public-interest determination. The ruling did not say election betting was legal. It said the CFTC had not done enough paperwork to ban it. Kalshi launched its election markets within days.
The CFTC banned political event contracts in 2012 after the Iowa Electronic Markets and Intrade drew regulatory scrutiny. Intrade, the Dublin-based prediction market, was shut down by the CFTC in 2012 for allowing U.S. persons to trade commodity options without CFTC registration. For a decade, the ban held. Kalshi's 2024 lawsuit broke it open.
CFTC Press Release: Intrade Shutdown, 2012In Kalshi v. CFTC (D.C. Cir. 2024), the court vacated the CFTC's self-certification rejection, finding the agency's public-interest analysis insufficient. The ruling was narrow — it did not hold that election contracts are legal per se — but it opened the door. Kalshi launched political markets immediately. Polymarket, operating from offshore, had already been running them for years without CFTC oversight.
Kalshi v. CFTC, D.C. Circuit (2024)Follow the Money
Prediction market companies have spent millions lobbying Congress and the CFTC to keep election betting legal and unregulated. This is not a grassroots movement. It is a well-funded campaign by venture-backed startups to turn American democracy into a financial product.
Kalshi lobbying spend in 2025 alone — up from $670K in 2024 and $240K in 2023
OpenSecrets: Kalshi Lobbying ProfilePolymarket lobbying spend in 2025 — a company technically banned from serving U.S. users
OpenSecrets: Polymarket Lobbying ProfileKalshi's federal lobbying spend in Q1 2026 alone — more than all of 2024
Event Horizon / OpenSecrets, Q1 2026Donald Trump Jr. is a paid adviser to Kalshi and simultaneously an investor in and unpaid adviser to Polymarket — the two largest prediction market platforms in the United States — through his venture capital firm 1789 Capital. The president's eldest son holds financial stakes in both companies while the Trump administration's CFTC has declined to reimpose the ban on election betting that the agency itself maintained for over a decade. The New York Times reported in January 2026 that Trump Jr. "is both an investor in and an unpaid adviser to Polymarket, and a paid adviser to Kalshi, the two biggest prediction markets." No law requires him to disclose the financial terms of either arrangement.
Kalshi was co-founded by Tarek Mansour, a former Goldman Sachs analyst, and Luana Lopes Lara. Its early investors include Sequoia Capital, Y Combinator, and Henry Kravis, co-founder of KKR — one of the largest private equity firms in the world. The same financial establishment that has spent decades extracting value from American workers is now funding the infrastructure to commoditize American elections.
CNBC: Kalshi and Polymarket's Washington Influence Campaign — April 15, 2026In April 2026, Kalshi issued the first-ever insider trading bans in prediction market history — suspending and fining three candidates for betting on their own races. Mark Moran was one of them. He placed a $100 bet on Kalshi deliberately, to prove that no federal law prohibits a Senate candidate from trading on their own race. Kalshi confirmed the point by acting voluntarily, under public pressure — which means the next platform does not have to. There is currently no federal law prohibiting a U.S. Senate candidate from betting on their own race.
After suspending Moran for his $100 bet, Kalshi ran a paid influencer campaign offering creators up to $400 — at $8 per 1,000 views — to share a CNN clip about their enforcement action. A company that spent $615,000 lobbying Congress in 2025 paid social media influencers four times the amount of the original bet to manage the story. The math speaks for itself.
Moran Called It Out First — The World Caught Up
National Security
On October 28, 2025 — months before this became a national story — the New York Post reported that large volumes of bets favoring Zohran Mamdani in the New York City mayoral race were originating from accounts in China and the Middle East, artificially inflating his prediction market odds and generating media coverage treating him as the frontrunner. Mark Moran was the first public voice to name this as a national security threat — not merely a gambling problem.
"When foreign governments can move prediction market odds, they move media coverage. When they move media coverage, they move voters. This is not hypothetical. It is happening right now."
— Mark Moran, OAN Primetime with Chanel Rion, April 2026
Polymarket operates from outside the United States and is technically prohibited from serving U.S. users — but enforcement is minimal and VPNs are trivial to use. During the 2024 presidential election, a single anonymous trader using the pseudonym "Théo" placed over $30 million in bets on Donald Trump, moving the market odds significantly and generating widespread media coverage. The identity of the trader was never confirmed. The nationality was never confirmed. No law required it to be. Donald Trump Jr. is an investor in Polymarket through 1789 Capital and serves as an unpaid adviser to the platform.
Atlantic Council: Weaponizing the Odds — Prediction Markets as Foreign InfluencePrediction market odds have become a standard data point in mainstream political coverage. The New York Times, FiveThirtyEight, Politico, and dozens of other outlets routinely cite Kalshi and Polymarket odds as indicators of electoral momentum. When a foreign actor — a government, a billionaire, a hedge fund — places a large bet to move those odds, they are not just gambling. They are purchasing a news cycle. The media amplification loop converts market manipulation into perceived political reality.
NY Post: Pro-Mamdani Bets from China, Middle East Skewing Market OddsThe Tribal Gaming Angle
Several prediction market operators have explored or pursued partnerships with federally recognized Native American tribes to offer election betting under tribal gaming compacts — a structure that would place them outside CFTC jurisdiction entirely. Tribal gaming compacts, established under the Indian Gaming Regulatory Act of 1988, were designed to protect tribal sovereignty and economic development. They were not designed to be a regulatory arbitrage vehicle for Silicon Valley startups seeking to run election betting platforms beyond federal oversight.
This is not respect for tribal sovereignty. It is exploitation of it.
Using the Indian Gaming Regulatory Act as a loophole to run unregulated political betting markets is an insult to the tribes whose sovereignty the Act was designed to protect. It takes a legal framework built to support Native American economic self-determination and converts it into a shield for Wall Street speculation on American elections. Mark Moran's legislation closes this loophole explicitly, prohibiting any entity — regardless of licensing structure or jurisdictional arrangement — from offering contracts on U.S. political outcomes to U.S. persons.
The States Are Fighting Back
On April 24, 2026, a bipartisan coalition of 38 state attorneys general, led by New York AG Letitia James, filed an amicus brief in Commonwealth of Massachusetts v. KalshiEX LLC, the landmark case now before the Supreme Judicial Court of Massachusetts. Their argument is simple and devastating: Kalshi's sports and election betting products are gambling, states have always regulated gambling, and the CFTC has no authority to override that without explicit action from Congress. Allowing Kalshi to proceed would violate the major-questions doctrine — the same constitutional principle the Supreme Court used to strike down the EPA's overreach in West Virginia v. EPA.
John Arnold — Co-Chair, Arnold Ventures — April 25, 2026
“37 states signed this amicus brief in Massachusetts vs Kalshi stating that states have always regulated gambling and are best positioned to do so. CFTC needs explicit action from Congress to override states’ authority, else it violates the major-questions doctrine.”
View on X — @johnarnoldThe Dodd-Frank Act of 2010 was passed to rein in the financial instruments that caused the 2008 recession. It gave the CFTC authority to regulate “swaps.” Kalshi argues that its sports and election bets are swaps, and that Dodd-Frank therefore preempts all state gambling laws nationwide. The 38 AGs call this argument “far-fetched and wrong.” At the time Dodd-Frank was enacted, states were barred from legalizing sports gambling entirely. Congress could not have intended to legalize it through a provision that does not mention gambling at all. If Congress meant to override decades of state gambling authority, it needed to say so clearly. It did not.
NY AG Press Release — April 24, 2026In January 2026, a Massachusetts Superior Court judge issued a preliminary injunction blocking Kalshi from allowing Massachusetts residents to bet on sports while the lawsuit is pending. The court rejected Kalshi's federal preemption defense and affirmed states' authority to regulate gambling in the interest of public health. Kalshi appealed. The 38-state amicus brief was filed in support of Massachusetts in that appeal.
Massachusetts AG Press Release — January 20, 2026Virginia's attorney general joined the coalition. The full list of signatories includes Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Wisconsin, and the District of Columbia. Red states and blue states. This is not a partisan issue. It is a democracy issue.
NY AG Press Release — Full Signatory ListIn 2025, Kalshi reported its users bet over $1 billion every month on the platform. 90 percent of that volume was sports betting. The company is not a financial innovation. It is a gambling operation wearing a CFTC registration as a costume.
The Advertising Double Standard
In the United States, gambling advertising is one of the most heavily regulated categories of commercial speech. Sports betting operators — DraftKings, FanDuel, BetMGM — must comply with strict state-by-state advertising codes, mandatory responsible gambling disclosures, age-gating requirements, and FTC influencer disclosure rules. Casinos are held to similar standards. The American Gaming Association's Responsible Marketing Code governs how licensed operators can advertise, who they can target, and what they must disclose. Violations carry fines, license suspensions, and in some states, criminal penalties.
Kalshi and Polymarket operate outside all of it. Because they have classified their products as financial contracts rather than gambling, they are not subject to any state gambling advertising code, any responsible gambling disclosure requirement, or any of the consumer protection rules that govern every licensed sportsbook in America. They can run influencer campaigns with no disclosures. They can target anyone, at any age, with no warnings. They can pay creators to promote their platform without any of the guardrails that apply to DraftKings running the same campaign.
None.
Because they are classified as CFTC-regulated financial exchanges, not gambling operators, zero state gambling advertising codes apply. Zero responsible gambling disclosures are required. Zero age-gating rules govern their influencer campaigns.
This is not a technicality. It is the entire business model. The \"financial contract\" classification is the mechanism by which Kalshi and Polymarket escape every consumer protection that applies to their direct competitors.
After suspending Mark Moran for a $100 bet, Kalshi ran a paid influencer campaign offering creators up to $400 — at $8 per 1,000 views — to share a CNN clip about their enforcement action. A licensed sportsbook running that same campaign would be required to disclose the payment, include a problem gambling helpline, and comply with state advertising codes. Kalshi was required to do none of those things. The company that spent $615,000 lobbying Congress in 2025 paid social media influencers four times the amount of the original bet to manage the story — with zero regulatory oversight of the campaign itself.
In February 2026, X updated its Paid Partnerships Policy to prohibit gambling promotions from influencer collaborations and paid content. The platform that Kalshi and Polymarket use to run their influencer campaigns now bans the exact type of paid gambling promotion those companies were running — while the CFTC, which technically regulates Kalshi, imposes no equivalent restriction. A social media company has more consumer protection rules for gambling advertising than the federal financial regulator.
iGaming Expert: X Bans Gambling from Influencer and Paid Partnerships — February 2026The Fix
Mark Moran will introduce the Democracy Protection Act on Day One of his Senate term. The bill does five things:
Absolute ban on political event contracts.
No exchange, platform, or entity — domestic or foreign — may offer, facilitate, or clear contracts whose value is determined by the outcome of any U.S. federal, state, or local election, referendum, or political appointment. This closes the CFTC loophole by statute, removing the agency's discretion and making the ban a matter of federal law.
Criminal penalties for foreign interference via prediction markets.
Any foreign national, foreign government, or foreign-controlled entity that places a bet on a U.S. political outcome — directly or through a nominee — commits a federal crime. The penalty mirrors existing foreign campaign finance law: up to five years in federal prison and a fine of three times the amount wagered. The Department of Justice and the CFTC share enforcement authority.
Insider trading prohibition for candidates.
No candidate for federal office, their campaign staff, or their immediate family members may hold any financial position — long or short — in any prediction market contract related to any U.S. election. Violations are treated as federal election law violations, subject to FEC enforcement and criminal referral.
Close the tribal gaming loophole.
The Indian Gaming Regulatory Act does not authorize political event contracts. The Democracy Protection Act makes this explicit: no tribal gaming compact may be used to offer, facilitate, or clear contracts on U.S. political outcomes. Tribal sovereignty is a constitutional principle. It is not a regulatory escape hatch for venture capital.
Advertising and influencer disclosure requirements.
Any entity operating a prediction market platform — regardless of its CFTC classification — that advertises to U.S. persons must comply with all state gambling advertising codes, FTC influencer disclosure requirements, and responsible gambling standards equivalent to those applied to licensed sportsbooks. Paid influencer campaigns must disclose the financial relationship, include a problem gambling helpline, and age-gate to users 21 and older. Violations are subject to FTC enforcement and civil penalties of up to $50,000 per violation. The "financial contract" classification is not a license to run an unregulated gambling advertising operation.
The same political class that has spent forty years telling Americans that corporate money in elections is protected speech is now telling them that betting on elections is just free markets. It is not. When the outcome of an election can be traded on a derivatives exchange, the election is no longer a democratic exercise. It is a commodity. And commodities can be cornered.
The United States has a Federal Election Campaign Act, a Foreign Agents Registration Act, and a Bipartisan Campaign Reform Act. Every one of those laws was passed because Congress recognized that unlimited money in elections corrupts the democratic process. Prediction markets are a new mechanism for the same corruption — one that operates outside every existing campaign finance framework because it was not anticipated when those frameworks were written.
Mark Moran is the only Senate candidate in America who has been banned by Kalshi from betting on his own race.
He takes that as a badge of honor. It means the people running the casino know he is coming to shut it down.