President Donald Trump is drawing a line in the sand over who gets to regulate prediction markets, announcing his administration will fight state-level restrictions and maintain federal oversight through the Commodity Futures Trading Commission.
In a Truth Social post Tuesday, Trump declared that preserving the CFTC's authority over prediction markets is "critically important" and that these platforms must be allowed to "thrive." He framed the push as part of a broader strategy to keep the U.S. competitive globally, warning that other nations are aggressively pursuing dominance in both prediction markets and cryptocurrency.
"Other Countries are after this new form of Financial Market, and we want to remain at the top," Trump wrote. "Likewise, and even more importantly, where we are currently the Crypto Capital of the World, other Countries are trying diligently to replace us in that capacity, but we won't let that happen."
The statement sets up a collision course with state officials who view prediction markets as illegal gambling. Minnesota's Democratic Governor Tim Walz signed legislation last week banning prediction market sites from the state, marking the first such ban in the nation. Trump's administration responded by filing a lawsuit asserting federal jurisdiction, and the president called out Walz and other state leaders by name Tuesday, including New York Attorney General Letitia James.
James recently sued crypto platforms Coinbase and Gemini, arguing their prediction market operations constitute illegal gambling. Both companies maintain they operate under federal regulation and are not subject to state control.
The jurisdictional battle reflects a fundamental disagreement about what prediction markets actually are. The Trump administration and the CFTC treat them as financial instruments similar to securities and commodities markets, regulated at the federal level. A growing coalition of state governors and attorneys general from both parties, however, argue that event contract betting, particularly on sports, is gambling pure and simple and belongs under state gaming authority like casinos and lotteries.
Trump's push to protect these platforms carries additional weight given his personal financial connections to the industry. Trump and his family have stakes in prediction market ventures as well as cryptocurrency projects, including World Liberty Financial. His eldest son, Donald Trump Jr., has ties to Kalshi and Polymarket, the two dominant platforms in event-contract betting.
The timing of Trump's defense follows a New York Times investigation Sunday that documented how the CFTC has consistently advanced prediction markets and softened enforcement of digital currencies, including through staffing changes that sidelined career officials.
Author Sarah Mitchell: "Trump is betting that federal authority will trump state resistance, but governors aren't backing down on what they see as unregulated gambling dressed up as finance."
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