Trump Seeks CFTC Control of Prediction Markets as States Crack Down on $1 Billion Tax Losses
Updated
Updated · The Conversation · Jun 16
Trump Seeks CFTC Control of Prediction Markets as States Crack Down on $1 Billion Tax Losses
3 articles · Updated · The Conversation · Jun 16
Summary
Trump attacked state regulation of prediction markets and prompted an administration review of giving the CFTC exclusive authority over the industry after Minnesota banned the platforms and Illinois moved against operators.
More than $1 billion in lost state tax revenue since early 2025 has fueled the state push, with Massachusetts also suing Kalshi over sports-related “backdoor betting” through prediction markets.
Kalshi and similar platforms now let users wager on elections, court rulings and even war-related events, raising concerns about insider trading, market manipulation and national-security risks.
Nearly 70% of 1,000 U.S. adults surveyed in March 2026 backed banning government officials from trading on prediction markets, and the Senate has already barred senators and staff from doing so.
Trump’s push faces conflict-of-interest scrutiny because Donald Trump Jr. advises Kalshi and Polymarket and has invested in Polymarket, while some former regulators argue states—not the CFTC—should oversee the markets.
As states and federal agencies clash, who will ultimately decide the legality of betting on political events?
Are prediction markets creating a more informed public or simply gamifying democracy for financial gain?
With soldiers caught profiting from secrets, can these markets be secured against national security threats?
$950 Million at Stake: The Federal-State Showdown Over Prediction Markets and the Future of US Gaming Regulation
Overview
The rapid rise of prediction markets has sparked a fierce regulatory battle between federal and state authorities. As the industry expands and attracts new players like Kalshi and Polymarket, the Commodity Futures Trading Commission (CFTC) is pushing to assert federal oversight, leading to direct legal actions against states trying to impose their own rules. This struggle has created a scramble to define who controls these markets, with high stakes for both regulators and industry participants. The ongoing conflict highlights the complex and evolving landscape of prediction market regulation in the United States.