A betting company’s unorthodox gambling model may pose a threat to U.S. economic stability, experts are warning, as federal lawmakers raise concerns over the company’s possible ties to regulatory entities and President Donald Trump’s family.

Last week, Brian Quintenz, a board member of Kalshi, Inc., faced the U.S. Senate in a confirmation hearing for the role of commissioner on the Commodity Futures Trading Commission (CFTC). He was nominated to the position by Trump in February, just a month after Donald Trump Jr. was announced as an advisor to Kalshi. Now, economists, attorneys, and both advocates and opponents of predatory gambling are sounding the alarm over Kalshi’s potential to radically destabilize the U.S. economy if one of its board members is placed on the commission that’s supposed to regulate the betting company.

What Is Kalshi?

“‘Kalshi’ in Arabic means ‘everything,’ and this is a company whose goal is to grab everything. And the best way they think of doing that is through legalized gambling,” John Kindt, professor of Business and Legal Policy at the University of Illinois at Urbana-Champaign, told The Washington Stand. “They found a brilliant way to put 24/7 gambling of all types everywhere on everybody’s cell phone and computer — and that brilliant way is to call themselves ‘events contracts,’ and this makes them part of what are called the predictions markets,” Kindt further explained.

The company was founded in 2018 but did not receive a federal CFTC license until late 2020. Kalshi officially launched its betting platform in July of 2021. The company asked the CFTC for “a new type of events contract on anything, because they claim basically that anything was an event and therefore people could gamble on any event,” Kindt explained. He continued, “Kalshi’s proposal was speculative and would adversely affect the commodities markets and create basically a speculative bubble.” The contracts Kalshi proposed, Kindt explained, would allow users to “bet on the election, and they can also bet on wildfires. They can even set their own wildfires and bet on them. I mean, it’s ridiculous. They can bet on when the fires will start, when the fires go out in California, they can bet on anything.”

Kalshi’s request was denied. At the time, Quintenz was a member of the CFTC, having been nominated by Barack Obama and reappointed by Trump. Kindt noted that it is unknown whether Quintenz voted for or against Kalshi’s proposal, but he became a board member quickly after resigning from the CFTC in 2021. Kalshi reapplied for the same type of contract in 2022 and 2023, when multiple senators urged the CFTC to maintain its prior position and reject Kalshi’s request, observing that the betting company’s plan to allow gambling on U.S. elections poses “a clear threat to our democracy and elections.” The senators wrote, “There is no doubt that the mass commodification of our democratic process would raise widespread concerns about the integrity of our electoral process.” They clarified, “Establishing a large-scale, for-profit political event betting market in the United States by approving Kalshi’s requested contracts, would profoundly undermine the sanctity and democratic value of elections. Introducing financial incentives into the elections process fundamentally changes the motivations behind each vote, potentially replacing political convictions with financial calculations.”

In 2023, following the 2022 midterm elections and ahead of the 2024 general elections, Kalshi revised its proposal to allow all users to place bets of up to $250,000 on election outcomes, but permitting Wall Street trading firms to place bets of anywhere from $50 million to $100 million. The CFTC once again rejected Kalshi’s proposal in September of that year, prompting the gambling company to sue the regulatory authority, claiming that it had overstepped its statutory authority in denying Kalshi’s proposed events contracts.

A year later, in September of 2024, Judge Jia Cobb of the U.S. District Court for the District of Columbia, a Biden appointee, ruled in favor of Kalshi, allowing the company to offer nationwide betting on the outcome of the 2024 elections — or on any events at all, for that matter. The U.S. Court of Appeals for the District of Columbia Circuit upheld Cobb’s ruling in October, rejecting the CFTC’s request for emergency relief.

Where Do the Trumps Come In?

Quintenz, a Republican, served on the CFTC from 2017 to mid-2021. He was originally appointed to the CFTC by Obama, but Trump withdrew his nomination. Later, Trump reappointed him to a five-year term on the regulatory commission. During that time, Quintenz oversaw Kalshi’s initial request for wide-ranging “events contracts” and, shortly after resigning from the CFTC, he became a board member at Kalshi. The week before Trump’s second inauguration, the president’s son Donald Trump Jr. was named as a strategic advisor at Kalshi. In May of this year, after Quintenz’s nomination to the CFTC and Trump Jr.’s appointment as a Kalshi advisor and just a month ahead of Quintenz’s confirmation hearing, the CFTC withdrew its appeal against Kalshi, effectively dropping all opposition to the company’s novel “events contracts.”

During his appearance before senators on the Agriculture, Nutrition, and Forestry Committee last week, Quintenz was grilled over his position on the legality of Kalshi’s “events contracts,” his business ties to the Trump family, and the appearance of a conflict of interest between his relationship with Kalshi and potential seat on the commission which Kalshi argues has sole regulatory oversight over its business. Of note, Quintenz asserted during his hearing that the Commodity Exchange Act grants the CFTC regulatory authority over Kalshi, rather than requiring the betting company to abide by state regulations.

Andrew Schlafly, an attorney and the son of Phyllis Schlafly, told The Washington Stand, “What Kalshi is doing is they’re bypassing state regulations under a theory that if the product is sold as an ‘event contract’ under the auspices of the CFTC, then it’s governed only by federal regulations, of which there are virtually none, and that those federal regulations preempt state regulations that have been allowed for more than a century. So it’s an incredible, breathtaking legal ploy by Kalshi to offer bets on nearly anything anywhere in the country — in places like Utah and Hawaii, where gambling is prohibited.”

Schlafly emphasized, “In terms of legal history, this is one of the most daring, sweeping attempts to push aside 100 years of state regulation and override it under a novel legal theory.” He noted that the U.S. Supreme Court, in Murphy v. National Collegiate Athletic Association (NCAA), gave states the authority to regulate sports betting individually. “This is a matter for the states, like alcohol is regulated by the states, things like that — part of the state’s police power, they call it — and so it’s up to the states. Well, now, Kalshi’s really saying the opposite, they’re really saying there’s a federal regulation that enables us to do all this as a contract,” Schlafly explained. He added, “They’re now saying the opposite of what the Supreme Court said in Murphy v. NCAA. Now Kalshi’s saying there’s nothing the states can do about this to stop us or regulate us.”

Quintenz’s comments, in addition to Trump Jr.’s role at Kalshi, raised concerns among mostly Democratic senators over a potential conflict of interest. Senator Cory Booker (D-N.J.) asked, “I’m worried you’re going to be in a position where — as chairman — are you going to feel empowered to push back on a company that is being advised by the president’s son?” Senator Amy Klobuchar (D-Minn.) added, “Even if you recuse yourself, there will remain a potential appearance of a conflict.”

Schlafly commented, “It’s not good that a Kalshi board member is on track to become chairman of the CFTC. Kalshi stands to make hundreds of millions of dollars, if not billions of dollars off of the CFTC allowing Kalshi to place the equivalent of gambling bets on events.” He added, “So there’s billions of dollars here at stake, and Kalshi board members should not become the chairman of the CFTC.” The veteran attorney explained, “The CFTC is not equipped to regulate gambling. It’s a small federal agency, and they lack the experience in it — and here’s a potential conflict of interest. That is an additional reason why gambling should not be allowed under the authority of the CFTC.”

Les Bernal, national director of Stop Predatory Gambling, said in comments to TWS, “The CFTC should be fighting against Kalshi — and they were. They actually had a huge lawsuit against Kalshi to try to stop this, which was just dropped in the last month.” He continued, “There’s no reason why they should have dropped it. Kalshi is operating way outside the bounds of the CFTC’s regulations. Now Quintenz has publicly said that he endorses these prediction markets and what they’re doing, and he’s going to usher that in across the United States.”

‘An Economic National Security Issue’

Kindt emphasized to TWS the threat posed by Kalshi’s “events contracts,” saying, “Kalshi’s position is bizarre at law and will economically hamstring the U.S. economy.” He explained, “You just can’t have anybody anywhere betting on anything they want to into the millions of dollars. This … will destabilize the financial and economic systems of America, and therefore it is actually a national security issue. It’s an economic national security issue.”

Kindt noted that, in 2000, the Commodity Futures Modernization Act unregulated derivatives, a type of financial contract between a buyer and a seller, which quickly resulted in Wall Street firms gambling on contracts, mortgages, bonds, and the like. “This is what caused the 2008 Great Recession, with the credit default swaps and the subprime mortgages. There are always people manipulating, and they manipulated this into subprime mortgages and credit default swaps, which caused the 2008 Great Recession,” Kindt recounted. He added, “Fast forward, we are now in 2025. Guess what? A similar template is being utilized. They’re going again through the CFTC and Kalshi is in the process of wiping out all of the state and federal regulations on gambling.”

The professor declared, “This is ‘open borders’ in the financial systems. And it impacts everybody. The non-gambling people say, ‘Well, I don’t gamble.’ This is going to nail everybody just like the Great Recession did. You don’t have to gamble.”

Bernal also pointed to the negative impact that legalized, largely-unregulated, 24/7 online gambling on anything at all will have on the U.S. economy. He explained, “Social gambling is already legal in our country. If you and I had a friendly wager on game six in the NBA Finals, you and I can place a friendly wager on that game — that was already legal. What’s illegal is, here in the United States, you can’t be the casino, you can’t be the lottery, you can’t be your own sportsbook.” He added, “That’s illegal. It’s only legal when you partner with the government.”

Although Bernal noted that the American Psychiatric Association classifies gambling as being as addictive as cocaine, opioids, and heroin, he added, “But that’s not why it’s illegal. Those products are illegal because they’re highly addictive. Commercialized gambling, even though it’s highly addictive, is illegal because it falls into the family of consumer financial fraud, in the family of price gouging and false advertising.” He continued, “So here you have a government program — the public voice of American government incentivizes millions and millions of Americans to participate in an institution that is designed to get citizens to lose huge sums of money.”

Bernal anticipated, “Over the next five years, the American people are on course to lose more than $1 trillion of personal wealth to commercialized gambling sanctioned by state governments. That’s $300,000 every minute.” He added, “Companies like Kalshi now are just coming in on top of this massive predatory gambling infrastructure that the U.S. has built and just exploiting it for all it’s worth.”

“This is about the role of government in America today. And this is ‘Exhibit A’ about commercialized gambling — and particularly predatory gambling — it’s an example of what’s broken about America today,” Bernal asserted. He continued, “Now you have this massive government program that has seeped into our financial markets and is having a radical transformation of our financial system.” Pointing to Kalshi’s “events contracts,” Bernal added, “You can bet on the weather, or bet on when the Los Angeles fires are going to be put out. Like, how perverse is that?” He observed that Kalshi’s particular brand of betting, if permitted nationwide, will circumvent state and local laws that have regulated gambling for decades. He said, “You’re gonna have 18-year-olds now being allowed to wager on almost anything they want to.”

Schlafly told TWS that opposition to Kalshi has united a diverse coalition of organizations and political factions that are typically at odds with one another. There are currently three federal court cases against Kalshi — in Maryland, Nevada, and New Jersey — and at least 34 states have allied against the betting behemoth, alongside both commercial gambling companies and anti-gambling organizations. “This coalition — I have not seen in recent years, 34 states come together like that, because what that means is both red and blue states came together on this issue,” observed Schlafly, who filed an amicus brief recently on behalf of Stop Predatory Gambling in the New Jersey-based case against Kalshi. He added, “It’s very unusual, because the arguments are not the same on the red and the blue side, and the red and blue side don’t agree on issues. Well, the red and blue side agree on this issue because they should not be allowed to override state law and offer bets on anything they want to people under the age of 21.”

Bernal quipped, “This might be the only time in our existence we’re on the same side as the state of New Jersey, which is one of the biggest predatory gambling states in the country.” He continued, “Kalshi’s jeopardizing the predatory gambling institution that the state of New Jersey runs.” He added, “We’re also aligned with the American Gaming Association, which, again, is a national trade lobby for the commercialized gambling operators. So it’s kind of a unique set of allies.”

The experts that The Washington Stand spoke to also emphasized the dangers posed by combining largely unregulated online gambling platforms with emerging and largely unregulated artificial intelligence (AI). “With AI, they’ll look at a pattern of trades or bets by somebody and they can quickly learn how to pitch more potential bets that exploit the person’s weaknesses and what they want to bet on,” Schlafly observed. Kindt added, “You’ve got to put AI in there, because the gambling companies are already using AI to hook and manipulate people, and it’s going to get bizarrely worse.” He added, “If you have unregulated AI and unregulated gambling with cash, what have you got? Economic and fiscal financial systems disaster.”

Kindt also noted the increasing rates of gambling addiction amongst Americans, and particularly amongst children. “Kids are going to be devastated by the Kalshi-type gambling, and kids are already showing almost double the gambling addiction rate of adult populations,” the professor said. He added, “Electronic gambling on cell phones in particular is the ‘hidden fentanyl’ of gambling addiction, and kids are already showing over a 10% gambling addiction.” Kindt stated bluntly, “It’s an involuntary tithe of our children to the idols of gambling.”