In a significant endorsement, President Donald Trump has publicly supported prediction markets, describing them as a "new form of Financial Market" while affirming the authority of the Commodity Futures Trading Commission (CFTC) over this sector.
In a post on Truth Social, Trump emphasized the necessity of maintaining the CFTC's exclusive jurisdiction over prediction markets, asserting that these markets should prosper.
He stated, "It is critically important that the CFTC’s exclusive authority over Prediction Markets is maintained, and that they will thrive." Additionally, Trump mentioned that his administration is establishing "rules of the road" intended to set a "Gold Standard for the States."
These remarks arise amidst an escalating legal conflict between prediction market operators and state regulators regarding whether contracts related to sports events should be governed by CFTC jurisdiction or state gambling laws.
Trump also criticized several high-profile opponents of prediction markets, including Chris Christie, Letitia James, Tim Walz, and JB Pritzker, stating, "We cannot have SCUM like Chris Christie, Letitia James, Tim Walz, and JB Pritzker setting the rules!" These officials have either taken regulatory actions or publicly condemned prediction markets.
Recently, New York Attorney General Letitia James initiated a lawsuit against Gemini and Coinbase concerning their prediction market platforms, while Minnesota Governor Tim Walz enacted legislation prohibiting prediction markets, making it the first state to impose such a ban. In retaliation, the CFTC has filed lawsuits against Minnesota and New York.
Illinois Governor JB Pritzker has signed an executive order to limit insider trading by state employees in relation to prediction markets, and former New Jersey Governor Chris Christie has consistently voiced his disapproval of these markets.
A key aspect of Trump's message was positioning prediction markets as financial instruments rather than gambling, aligning with arguments made by the industry and the CFTC in ongoing litigation. He remarked that other nations are pursuing this innovative financial market and stressed the importance of the U.S. maintaining its leadership.
Trump referred to prediction markets as a "Financial Market," reinforcing the administration's stance that these products should be regulated under federal financial laws rather than gambling regulations. He also linked prediction markets to the broader competition in the cryptocurrency and fintech sectors, stating, "It is a major Industry, and we must protect it."
The CFTC has consistently maintained that the Commodity Exchange Act provides it with "exclusive jurisdiction" over federally regulated event contracts on designated contract markets, a position that is currently being challenged in various lawsuits involving states like Nevada, New Jersey, Maryland, and Minnesota.
Trump also commended CFTC Chairman Michael Selig, expressing gratitude for his leadership: "Mike Selig, CFTC Chairman, and respected by all, is doing a great job. Thank you, Mike!"
These recent comments reflect a notable shift from Trump's earlier skepticism about prediction markets expressed in April, where he described the global landscape as resembling a casino and voiced his reservations about the concept.