The prediction market industry spent $1.84 million on federal lobbying in the first quarter of 2026, a record high and more than 60% above Q1 2025 levels. It is the first hard data point quantifying the scale of the industry's political operations as it faces mounting legislative and regulatory pressure."The policy landscape has rapidly evolved just in the last two or three months," said Ronak D. Desai, a partner at Paul Hastings, according to Bloomberg. "Prediction markets have moved from the periphery to the center of congressional scrutiny."Prediction markets are pouring money into Washington to defend against escalating criticism that their fast-growing platforms are contributing to a gambling explosion and enabling insider trading https://t.co/1uvY5Lrk6r— Bloomberg (@business) April 20, 2026Who is SpendingThe surge is coming from two directions: native prediction market platforms and incumbent sports betting operators who have recently entered the space.Kalshi, which opened a dedicated D.C. office and hired prominent Democratic strategists, is among the industry’s biggest spenders.A new trade group, the Coalition for Prediction Markets, now coordinates industry positions. A former U.S. congressman leads the group, which includes regulated U.S. players such as Kalshi, Coinbase, Crypto.com, and Robinhood.Polymarket, which has historically taken a lower-profile approach in Washington, is also building a physical presence. The company has been experimenting with a pop-up venue in downtown D.C. as an informal way to engage policymakers.DraftKings and FanDuel, both of which launched prediction market products in the past year, have also ramped up significantly. DraftKings' lobbying expenditure rose 29% year-over-year, with the company hiring lobbyists focused specifically on the CFTC. FanDuel's spend jumped 58%.The increase reflects growing pressure on the sector from multiple directions. More than a dozen bills have been introduced in Congress this year seeking to constrain or reclassify prediction markets, while state regulators and the casino industry argue that the platforms are operating as unlicensed gambling venues.The Jurisdictional QuestionThe central fight is over which federal body gets to regulate a market that has grown into the billions. The industry is pushing to stay under the jurisdiction of the Commodity Futures Trading Commission, which operates with a relatively light touch compared to state-by-state gambling frameworks."Right now, prediction markets are the advocacy topic du jour," said Cody Carbone, CEO of the Digital Chamber, a crypto lobbying group.For brokers and fintech infrastructure providers, the issue is clear: whether prediction markets remain a viable product category under existing derivatives rules. Record Q1 spending only underscores how high the stakes have become.This article was written by Tanya Chepkova at www.financemagnates.com.