President Donald Trump has moved to block state-level restrictions on prediction markets, declaring that federal regulators must maintain exclusive control over the rapidly expanding industry while attacking Democratic governors and state officials pushing back against the platforms.
In a social media post Tuesday, Trump said it was "critically important" that the Commodity Futures Trading Commission retain authority over prediction markets, which allow users to make speculative bets on upcoming events. He framed state regulation as a threat to American competitiveness, saying "other countries are after this new form of financial market, and we want to remain at the top."
The push comes as more than a dozen states have moved this year to restrict or ban prediction markets, viewing them as gambling disguised as financial derivatives. Minnesota last week became the first state to impose an outright ban, prompting the CFTC to immediately file a federal lawsuit challenging the law.
Trump's criticism targeted Democratic figures by name. "We cannot have SCUM like Chris Christie, Letitia James, Tim Walz, and JB Pritzker setting the rules," he wrote, referring to a former Republican rival and current Democratic governors and state officials.
Minnesota Attorney General Keith Ellison defended the state's action, arguing that prediction markets are "designed to be addictive and prey especially on young people and low-income folks" and "help the ultra-rich get richer and the rest of us get poorer."
The prediction market industry has exploded in recent years. Trading volume on Kalshi, the market leader, surged from $100 million last year to more than $3 billion today, according to industry estimates. Two major platforms, Kalshi and Polymarket, operate by charging transaction fees and classify themselves as derivatives traders rather than gambling operators.
Trump's stake in the industry complicates his position. His media company released a prediction market product last year, and his son Donald Jr maintains ties to two top prediction market companies. Trump himself has stated he was "never much in favor" of prediction markets overall.
The debate has exposed broader ethical concerns. In one case, US Army soldier Gannon Ken Van Dyke allegedly used classified information about plans to capture former Venezuelan president Nicolas Maduro to generate more than $400,000 in trading profits. Federal prosecutors indicted him last month on insider trading charges, raising questions about whether people with advance knowledge of world events should be allowed to profit from betting on their outcomes.
Opposition to prediction markets is not strictly partisan. Minnesota's ban passed with bipartisan support, and Republican-controlled Utah, known for strict anti-gambling laws, is also considering measures to restrict betting through these platforms.
Author James Rodriguez: "Trump's crusade to keep prediction markets under federal control while attacking state restrictions rings hollow when his own financial interests are directly at stake."
Comments