Market Moves
Trump Stands to Make Money From CFTC Campaign Supporting Predictive Markets
The president’s Truth Social plans to provide event contracts trading, while one of his sons has been hired by prediction market operator Kalshi.
Reported by Michael Katz
President Donald Trump and his Trump Media & Technology Group stand to profit from the Commodity Futures Trading Commission’s recent campaign to stop states from outlawing regulated prediction markets. Multiple lawsuits lodged by states claim the markets are nothing more than bookies skirting the law.
The markets—which include Kalshi, Robinhood, Coinbase, Polymarket and Crypto.com, among others—provide a platform on which contracts may be traded based on a wide range of events, such as who will be the 2028 Democratic presidential nominee, who will win the NBA championship or where Taylor Swift and Travis Kelce’s wedding will be.
CFTC Claims Authority
Trump Media’s Truth Social is partnering with Crypto.com to provide prediction markets through the social media platform. Additionally, the president’s eldest son, Donald Trump Jr., has been hired as a strategic adviser by market operator Kalshi, which has been sued approximately 20 times by states under anti-gaming laws.
The CFTC has vigorously defended the legality of the markets and accused states of overreaching their authority, arguing that Congress has bestowed upon the regulator authority over predictive markets and that federal law supersedes state anti-gambling laws. The regulator also warned that if states or courts determine that sports or political event contracts are not swaps, it could potentially disrupt U.S. derivatives markets.
In 2010, Congress amended the Commodity Exchange Act under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The new law granted the CFTC authority over contracts based on a commodity, which is loosely defined in the legislation. The regulator maintains that the CEA is intended to account for innovation in the financial markets, allowing for new and emerging use cases within CFTC-regulated markets.
The CFTC’s stance on predictive markets took a 180-degree turn when Trump appointed Michael Selig as its chair. Selig withdrew a rule proposed in 2024 that would have prohibited event contracts based on the outcome of a political contest such as an election.
“Such contracts not only fail to serve the economic purpose of the futures markets—they are illegal in several states and could potentially and impermissibly preempt state responsibilities for overseeing federal elections,” then-CFTC Chair Rostin Behnam said in a statement at the time.
Selig said in February, when he announced he was quashing the proposed rule, that it had “reflected the prior administration’s frolic into merit regulation with an outright prohibition on political contracts ahead of the 2024 presidential election.”
‘Federal Law is Supreme’
CFTC has won some legal battles recently that could greatly benefit prediction markets, including one run by Truth Social. Cases are currently being heard in the U.S. 4th, 6th and 9th Circuit Courts of Appeal.
On April 10, the U.S. District Court for the District of Arizona granted the CFTC’s request for a temporary restraining order to block the Arizona attorney general from prosecuting Kalshi. The court ruled that “federal law is supreme” and that states cannot “weaponize” criminal law against firms complying with federal regulations.
On April 6, the U.S. 3rd Circuit Court of Appeals upheld, in a two-to-one decision, a district court’s preliminary injunction barring New Jersey from enforcing its gambling laws against Kalshi. It also held that sports event contracts are “swaps” under the CEA. The one dissenter, U.S. District Judge Jane Roth, wrote in her opinion that Kalshi’s products are “virtually indistinguishable” from betting products on online sportsbooks.
“The ruling represents a significant development in the ongoing litigation over whether the CFTC is the exclusive regulator of predictions markets,” law firm Paul, Weiss stated in a memo. “Given this decision, as well as the CFTC’s recent suits against Arizona, Connecticut, and Illinois, it seems increasingly likely that the question of the CFTC’s authority over prediction markets will ultimately be settled by the Supreme Court.”
The regulator has taken the fight to the states. It lodged complaints against Arizona, Connecticut and Illinois, alleging they are trying to usurp the CFTC’s exclusive jurisdiction to regulate event contracts and accusing the states of trying to outlaw CFTC-approved predictive markets. The Department of Justice is partnering with the regulator in the litigation.
‘Prediction Markets Are Gambling’
A spokesperson for Illinois Governor J.B. Pritzker, a Democrat, accused the Trump administration of “carrying water” for companies conducting insider trading schemes.
“These firms are making record profits while exposing Illinoisans to gaming products with no basic consumer protections or oversight,” the spokesperson said. “This is a blatant attempt to sidestep the state’s jurisdiction and put profits ahead of consumers. Illinois isn’t backing down—we will continue to fight to protect Illinois consumers.”
Representatives for Connecticut Governor Ned Lamont and Arizona Governor Katie Hobbs, who are both Democrats, did not immediately respond to requests for comment.
In March, Senators Adam Schiff, D-California, and John Curtis, R-Utah, introduced the Prediction Markets Are Gambling Act, which would prohibit the CFTC from registering entities listing any prediction contract that resembles a sports bet or casino-style game. The proposed law was referred to the Senate Committee on Agriculture, Nutrition and Forestry.
“Sports prediction contracts are sports bets—just with a different name,” Schiff said when the legislation was introduced. “Rather than enforce the law, the CFTC is greenlighting these markets and even promoting their growth.”