President Donald Trump has reiterated his support for federal oversight of prediction markets, as the Commodity Futures Trading Commission (CFTC) takes legal action against several states.
In a post on Truth Social, Trump emphasized the necessity of maintaining the CFTC's exclusive authority over prediction markets, asserting that they must flourish under federal guidance. He stated, “Under my leadership, we are establishing the 'rules of the road' that will serve as the Gold Standard for the States.”
Trump also highlighted the United States' position as the leading hub for cryptocurrency, warning that other nations are striving to usurp this title. “We will not allow that to happen,” he declared.
The President criticized state officials who have enacted measures against prediction markets, specifically naming Chris Christie, Letitia James, Tim Walz, and J.B. Pritzker, stating, “We cannot have SCUM like them setting the rules!”
The CFTC has initiated lawsuits and filed amicus briefs against states attempting to regulate or ban prediction market platforms. The central issue revolves around whether contracts for sports and entertainment events should be classified as federally regulated financial instruments or as gambling activities subject to state laws.
Federal regulators and industry stakeholders argue that prediction markets operating within federally regulated designated contract markets fall under CFTC jurisdiction. Conversely, state officials contend that betting on event contracts is akin to gambling and should be overseen by state gaming regulators or banned in states where such activities are prohibited.
This legal battle has already ascended to the federal appellate level and is anticipated to reach the US Supreme Court soon.
In recent months, several states have taken enforcement actions against operators of prediction markets. For instance, Tim Walz enacted legislation imposing criminal penalties for running prediction market platforms in Minnesota, prompting a lawsuit from the Trump administration to assert CFTC authority.
In New York, Attorney General Letitia James has filed lawsuits against Coinbase and Gemini, claiming they violated state gambling laws with their prediction market platforms. These companies argue they are regulated federally, not by state laws.
Illinois Governor J.B. Pritzker has also issued a cease-and-desist order related to prediction market activities. In a response to Trump on social media, he stated that Illinois is taking steps to prevent insider trading in online prediction markets.
Pritzker accused Trump of attempting to undermine state regulations to benefit his family's financial interests, labeling him “the most corrupt President in our nation’s history.”
Former New Jersey Governor Chris Christie has defended state authority over gambling-related products, including prediction markets.
The discussion surrounding prediction markets gained momentum following a report from The New York Times, which suggested that the CFTC under former acting Chair Caroline Pham sidelined officials who expressed concerns about approvals involving crypto and firms linked to Trump’s business interests.
This report alleged that the agency facilitated the growth of prediction markets while easing regulatory scrutiny on digital currencies.
Trump and his family have connections to companies involved in prediction markets and cryptocurrency. Donald Trump Jr. serves as an advisor to Polymarket and Kalshi, two firms in the event contract sector. The Trump family's business interests also extend to the crypto venture World Liberty Financial.
Gemini, founded by Cameron and Tyler Winklevoss, has recently launched a prediction market platform and has applied for self-certification of parlay-style contracts, with both Winklevoss brothers being public supporters of Trump.
Trump also mentioned international competition regarding prediction markets, stating, “Other Countries are after this new form of Financial Market, and we want to remain at the top.” Recent reports indicate that Indonesia has imposed bans on prediction market operations.