U.S. President Donald Trump is pushing for federal regulation of prediction markets. He argued the Commodity Futures Trading Commission must have exclusive authority over this market. His statement comes at an important point as operators Kalshi and Polymarket come under legal pressure.
Trump Backs CFTC Oversight of Prediction Markets
On Truth Social, Trump wrote, “It is critically important that the CFTC’s exclusive authority over Prediction Markets is maintained, and that they will thrive.” The administration is developing “rules of the road” that are the “Gold Standard for the States,” he added.
Trump went on to say that he would tie prediction market oversight to the entire digital asset space. “Where we are currently the Crypto (Bitcoin, etc.) Capital of the World, other Countries are trying diligently to replace us in that capacity, but we won’t let that happen,” he wrote.
Furthermore, Trump even described crypto as “a major Industry” that the United States “must protect.” For context, the comments came shortly after a federal appeals court ruled against Polymarket and Kalshi. The panel refused to temporarily stop gambling-related lawsuits filed in Nevada and Washington state on behalf of Kalshi and Polymarket.
About The Lawsuits Against Prediction Market Platforms
Both companies had filed emergency motions asking the Ninth Circuit Court of Appeals to stop the trial from beginning. However, the judges said they had no reason to believe that either side had a strong chance of winning in arguments that the conflict should be heard in a federal court rather than in state courts.
The cases represent the growing battle between state gaming authorities and federally-regulated prediction market sites. Just like Trump, Kalshi and Polymarket also claim that the contracts on their platforms are subject to the jurisdiction of the CFTC. Thus, they believe that they’re immune to state-level enforcement.
Nonetheless, Nevada authorities have questioned the companies about their lack of state gaming licenses. Moreover, Washington officials have alleged that Kalshi is selling illegal sports-related wagering products.
The appellate panel said it was not enough for the companies to raise defenses under the Commodity Exchange Act to automatically move the lawsuits to federal court. Additionally, the judges rejected Polymarket’s argument that the companies’ compliance with federal regulatory obligations was sufficient to effectively put the company in federal control.
In another update, the U.S. House panel also launched an investigation into Polymarket and Kalshi. They are probing on grounds of insider trading. On a global level, there is crackdown on Polymarket by Indonesian and Indian governments.
The new decisions join a patchwork of legal decisions on prediction markets in the U.S. In a previous case earlier this year, a New Jersey appeals court ruled in favor of Kalshi in a lawsuit concerning sports event contracts. Further, courts in other states, such as Maryland, Ohio and Nevada, have recently been on the side of state gaming authorities.
Meanwhile, in his statement, Trump also appreciated CFTC Chairman Mike Selig. Trump said Selig is “doing a great job.”
