Trump advocates that prediction markets should be regulated at the federal level by the CFTC, rather than at the state level. He pointed out that there is an ongoing debate about whether prediction markets should be classified as federally regulated derivatives or illegal gambling platforms. Trump also warned that excessive restrictions on this industry could cause the U.S. to fall behind in global competition.
Trump criticized state officials and regulators on his social platform Truth Social, who have taken action against prediction market platforms like Kalshi, Polymarket, Crypto.com, and Robinhood. Some states have already filed lawsuits or issued cease-and-desist orders against these companies, claiming they are offering unlicensed gambling products under the guise of financial markets. Trump dismissed these actions, arguing that prediction markets are an important emerging financial industry that should continue to be regulated federally, rather than controlled at the state level.
The legal debate centers on whether prediction markets should be viewed as federally regulated derivatives or a form of online gambling. Companies like Kalshi argue in court that their markets fall under the Commodity Exchange Act and should therefore be exclusively regulated by the CFTC.
Trump sees this issue as part of the global fintech competition. He noted that other countries are actively embracing prediction markets and warned that if the U.S. imposes excessive restrictions, it could fall behind in this area. Trump believes that prediction markets are an important emerging industry that will play a significant role in the financial sector in the future.
Interestingly, Trump and his family also have ties to this field. His son, Donald Trump Jr., reportedly holds an investment in Polymarket, serves as a member of its advisory board, and provides advice to Kalshi.