Kalshi hired former Obama aide Stephanie Cutter as a policy adviser on April 2, 2026, a move that lands amid a rapidly escalating legal and regulatory fight over whether prediction markets are federally regulated derivatives or illegal state-level gambling.
The prediction market operator announced the appointment on its official blog, describing Cutter as a veteran Democratic strategist and framing the hire as part of a broader push to expand the company’s presence in Washington.
Cutter’s resume includes senior roles in both of President Obama’s campaigns and a stint as a deputy campaign manager. Her arrival gives Kalshi a seasoned political operative at a moment when the company faces pressure from multiple directions, including federal regulators and state attorneys general.
Three States, 20 Criminal Counts, and a Federal Agency in the Middle
The legal picture around Kalshi has grown considerably more complex in recent weeks. On March 31, 2026, the Commodity Futures Trading Commission filed lawsuits against Arizona, Connecticut, and Illinois, arguing that those states had taken enforcement actions against CFTC-registered designated contract markets in violation of exclusive federal jurisdiction.
The CFTC suits came just weeks after Arizona’s attorney general filed criminal charges against Kalshi in a separate state-level action. According to AP reporting, Arizona’s charging document contained 20 counts tied to alleged illegal gambling and election-betting violations.
Gambling lawyer Daniel Wallach told OPB that the Arizona criminal case “raises the stakes considerably” for other pending state cases involving Kalshi, suggesting the state-level enforcement trend is far from contained.
“States have increasingly utilized state court enforcement actions as the first line of attack.”
— Daniel Wallach, gambling lawyer, via OPB
The compounding effect matters. Kalshi is not facing a single legal challenge but a multi-front war: a federal agency asserting its jurisdiction on one side and individual states pursuing criminal and civil enforcement on the other. That dynamic makes the Cutter hire less surprising and more operationally urgent.
CFTC Rulemaking Adds Another Layer
Beyond the lawsuits, the CFTC opened a formal rulemaking process on March 12, 2026, publishing an Advanced Notice of Proposed Rulemaking on how event contracts and prediction markets should be regulated under the Commodity Exchange Act. The agency set a 45-day written comment period following Federal Register publication.
That rulemaking window represents both a risk and an opportunity for Kalshi. The outcome could cement the CFTC’s exclusive authority over prediction markets, which would undercut state-level enforcement efforts. It could also impose new compliance requirements that reshape how companies like Kalshi operate.
CFTC Chairman Michael S. Selig has rejected what he called a fragmented patchwork of state regulation, positioning the agency as the sole authority over these markets. For Kalshi, having a policy adviser who can navigate Washington’s regulatory apparatus during a live comment period is a practical necessity.
Why a Policy Adviser, Not Just More Lawyers
Kalshi’s choice to bring on a political strategist rather than simply expanding its legal team signals that the company views this fight as partially political, not purely judicial. Prediction markets sit at the intersection of financial regulation, gambling law, and election policy, a space where legislative relationships and public framing matter as much as courtroom arguments.
The broader regulatory environment for digital markets is shifting rapidly. The entry of traditional finance players like Charles Schwab into crypto trading has intensified debate over where federal jurisdiction begins and state authority ends. Meanwhile, strengthening expectations of a Fed hold have kept macro uncertainty elevated, adding another variable for companies operating in regulated financial products.
Kalshi’s announcement did not explicitly tie the Cutter hire to its litigation strategy. According to unconfirmed headline framing, the appointment was directly driven by the lawsuits and the CFTC jurisdiction fight, but Kalshi’s own blog post framed it as a Washington expansion effort without referencing specific legal proceedings.
The institutional push toward regulated digital assets, including efforts like the Ethereum Foundation’s treasury staking plan, underscores how quickly the line between traditional finance and crypto-native products is blurring. For prediction markets, the question is whether they will be regulated as derivatives under a single federal regime or policed state by state as gambling.
Kalshi now has a 20-count criminal case in Arizona, federal lawsuits in three states, and a live CFTC rulemaking that could redefine its regulatory footing. The Cutter hire suggests the company is preparing to fight on the political front as aggressively as it is in court.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
