Kalshi Accused of Using Child Protection Bill to Push Gaming Contracts

The debate surrounding online gambling and the protection of minors has taken a sharp turn in the United States. At the heart of the controversy is Kalshi, a leading prediction market operator, which recently collaborated with lawmakers to introduce the Facial Recognition to Protect Children Act. On its face, the initiative appears to be a noble effort to enhance age verification. However, deeper analysis has led to accusations that the company is using child safety as a legislative shield to advance its own commercial interests. Critics and legal experts suggest the bill contains subtle language changes that could allow prediction markets to expand aggressively into sports wagering and casino-style contracts.

Congressman Josh Gottheimer introduced the legislation, which would mandate that online sportsbooks and prediction markets use commercially available facial recognition technology. This tech would verify a user's age before they are allowed to place a wager or execute a trade. The urgency of the matter is supported by data from Common Sense Media, showing that 36 percent of boys aged 11 to 17 have gambled in the last year. This figure rises to 40 percent for those aged 14 to 17. In states like Tennessee, the number of flagged underage accounts jumped from 100 in 2023 to more than 400 in 2024, highlighting a growing problem with the current honor-code systems.

Numbers and facts

Financial records and lobbying reports reveal the significant resources Kalshi has deployed to influence this legislative path. CEO Tarek Mansour and co-founder Luana Lopes Lara have donated substantial sums to several of the bill's sponsors. Mansour provided 7,000 dollars to Gottheimer and other co-sponsors, while Lara contributed another 7,000 dollars to Representative Darren Soto. In the previous year alone, Kalshi spent over 1 million dollars on lobbying efforts. This level of spending is nearly unprecedented for a company of its size, surpassed only by massive industry groups like the American Gaming Association and the Gila River Indian Community.

Daniel Wallach, a prominent gaming lawyer, has voiced serious concerns regarding the actual text of the 27-page bill. He noted that the term facial recognition is mentioned only once in the body of the document. Meanwhile, the legal language proposes revisions to the Commodity Exchange Act (CEA). By changing the criteria for event contracts from involving prohibited categories to being based on them, the bill might create a pathway for the CFTC to approve gambling contracts that were previously restricted. Wallach argues that the bill's preamble is doing an awful lot of heavy lifting for purposes that have little to do with protecting children.

"Protecting kids should be a no-brainer and is a top priority at Kalshi. But this can't just be one company’s responsibility – it has to be an industry standard." - Tarek Mansour, CEO of Kalshi

Background

This legislative push comes at a time when prediction markets are already under fire for alleged integrity issues. Recently, Gabriel Perez, a White House technical advisor, was placed on leave after allegedly making over 100,000 dollars by trading on Kalshi markets related to President Trump's speeches. He reportedly used his access to the President's teleprompter to predict which words would be spoken. While Kalshi pointed out that they flagged and referred the activity to the CFTC, the incident has fueled the narrative that these markets functions like a Wild West without sufficient federal oversight. The new bill is seen by some as an attempt to legitimize more forms of wagering under the guise of security.

Why it matters for German players

The situation in the US serves as a reminder of how different the regulatory landscape is in Germany. Under the Interstate Treaty on Gambling 2021 (GlüStV 2021), German players are already protected by central systems like LUGAS and the OASIS ban file. While US lawmakers are just now discussing facial recognition, Germany has already implemented hard limits, such as the 1,000 euro monthly deposit cap and the 1 euro stake limit for virtual slots. For a German user, playing at a GGL-licensed casino means transparency and safety from the kind of legislative maneuvers seen in the US. There is no need for hidden backdoors when the rules for player protection are already set in stone by the authorities.

What it means for GGL-licensed casinos

For operators holding a license from the Gemeinsame Glücksbehörde der Länder (GGL), the American controversy underscores the importance of a clear regulatory framework. In Germany, the priorities are clearly defined by the law, leaving no room for companies to write their own rules under the pretext of child protection. GGL-compliant casinos must adhere to strict verification and monitoring standards that prevent minors from accessing the platforms without needing to engage in high-level political lobbying. This institutional stability protects both the operator and the player from the or volatile shifts currently seen in the US prediction market sector.