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Prediction markets battle escalates after president Donald Trump sides with CFTC

The Commodity Futures Trading Commission (CFTC) has sent a new rule for prediction market event contracts to the White House for review. This comes as federal and state authorities debate which government body should oversee this rapidly expanding industry.

Summary

  • The CFTC’s proposed prediction-market rule is under White House review before it can be released for public comment.
  • The rule could create the first comprehensive federal framework for event contracts and affect platforms such as Kalshi and Polymarket.
  • Trump backed CFTC control over prediction markets, while Illinois Governor JB Pritzker defended state action against insider trading.

As an analyst, I’m tracking a new proposal that’s now under review by the White House Office of Management and Budget. This is a key step before the Commodity Futures Trading Commission officially releases the plan and opens it up for public feedback. Right now, the specifics of the proposal haven’t been made public yet.

CFTC pushes toward event contract rules

The new rule is likely to be based on feedback the CFTC received earlier this year. They held a public consultation in the spring and received over 3,000 responses addressing topics like illegal trading practices, prohibited agreements, market protection measures, and the legal framework for event-based contracts.

If approved, this new rule would establish a complete set of federal guidelines for prediction markets in the US. It would likely change how platforms like Kalshi and Polymarket operate for American users, particularly as these companies are receiving increased scrutiny from state regulators.

As a researcher, I’m focused on a key debate: should agreements linked to elections, sporting events, and public happenings be classified as complex financial tools regulated by the federal government, or simply as forms of gambling governed by individual state laws? It really comes down to how we define and oversee these types of contracts.

States challenge federal control

Several states, including Nevada, New Jersey, and Maryland, are cracking down on companies that run prediction markets. Officials in these states believe that some of the agreements offered in these markets are similar to sports betting or other forms of gambling, and therefore should be subject to the same laws regarding gaming, taxes, and consumer protection.

Kalshi and similar companies argue their contracts fall within the rules of the Commodity Exchange Act. However, state regulators disagree, and in multiple cases have ruled that federal approval doesn’t prevent them from enforcing their own state gambling laws.

The issue is currently being debated in court, with judges disagreeing on whether the CFTC’s authority takes precedence over state gambling laws. These legal battles will likely determine how much control states have over platforms offering contracts tied to specific events.

Pritzker criticizes Trump over prediction markets

On Tuesday, President Donald Trump weighed in on the debate, backing Brian Selig’s position and stating that the CFTC should be the sole regulator of prediction markets. Trump emphasized the importance of the issue, arguing that federal oversight is needed to establish consistent national standards.

In a recent post, Trump criticized Chris Christie, Letitia James, Tim Walz, and JB Pritzker. He accused them of overstepping boundaries as his administration tried to establish guidelines for states, and he used strong language in his criticism.

Illinois Governor JB Pritzker announced on X (formerly Twitter) that the state has moved to prevent and prohibit illegal insider trading within online prediction markets. He also stated that Donald Trump is attempting to block state regulation of these markets, potentially to allow his associates to profit.

Illinois has moved to stop and prohibit illegal stock trading using online prediction markets. The former president, who has a history of unethical behavior, is attempting to prevent states from overseeing these markets, likely to allow continued financial gain for himself and those around him.

— Governor JB Pritzker (@GovPritzker) May 26, 2026

Donald Trump Jr. is connected to the prediction market industry. He made an investment in Polymarket through 1789 Capital, a venture capital firm, and also works as an advisor for Kalshi.

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2026-05-28 01:00