U.S. President Donald Trump has backed the CFTC’s exclusive authority over prediction markets as federal and state officials fight over who should regulate the fast-growing sector.
Summary
- Trump has backed the CFTC’s exclusive authority over prediction markets as states argue that some contracts should fall under gambling laws.
- The dispute covers sports and entertainment-linked contracts, with lawsuits and federal court cases already testing state and federal power.
- Trump’s family ties to Polymarket and Kalshi have added scrutiny as Congress also probes the prediction market sector.
According to Trump’s Truth Social post late Tuesday, keeping the Commodity Futures Trading Commission in charge is “critically important” as the U.S. works to set national rules for prediction market contracts. He said his administration is creating “rules of the road” and argued that states should not control the sector.
Trump also criticized former New Jersey Governor Chris Christie, New York Attorney General Letitia James, Minnesota Governor Tim Walz, and Illinois Governor J.B. Pritzker. In the same post, he said other countries are chasing the new financial market and added that the U.S. wants to stay ahead.
CFTC pushes back against state regulators
The dispute centers on whether prediction markets tied to sports and entertainment should be treated as financial contracts or gambling products. The CFTC has argued that contracts listed by regulated designated contract markets fall under federal oversight.
CFTC Chair Michael Selig has supported that position, and Trump’s post echoed the agency’s view. The regulator has already filed lawsuits and amicus briefs against several states that have tried to restrict or challenge prediction market operators.
State officials have taken a different position. They argue that some prediction market contracts function like gambling and should fall under state gaming laws.
James has filed lawsuits alleging that some platforms violate state gambling rules. Illinois has sent a cease-and-desist notice, while Minnesota recently passed a law with criminal penalties for operating prediction markets. Christie has also defended state power to regulate gambling products, which he has compared with prediction markets.
Court fight may reach Supreme Court
Several cases have already moved into federal appellate courts. The dispute could later reach the U.S. Supreme Court if lower courts continue to split over federal and state power.
At the same time, the House of Representatives has confirmed a probe into prediction markets. The inquiry comes as crypto-linked companies and platforms tied to Trump’s allies seek approvals connected to prediction market operations.
Trump’s family has links to the sector. Donald Trump Jr. serves as an adviser to both Polymarket and Kalshi, two major prediction market providers.
Gemini, the crypto exchange founded by Cameron and Tyler Winklevoss, has also launched a prediction market platform. Both Winklevoss brothers have publicly supported Trump, and Gemini recently filed to self-certify parlay-style contracts.
Trump also referred to his campaign pledge to make the United States the “crypto capital.” His post came as several countries, including Indonesia, Spain, and India, have moved to ban prediction markets from operating in their markets.
The regulatory battle also places more pressure on prediction market operators as they seek federal approvals while facing state-level challenges. Any final court decision could shape how platforms list contracts tied to elections, sports, entertainment, and crypto events in the U.S. market.