US President Donald Trump has backed the CFTC’s special authority over futures markets as federal and state officials battle over who should regulate the fast-growing sector.
Summary
- Trump has backed the CFTC’s special authority over futures markets as states argue that some contracts should fall under gambling rules.
- The dispute involves contracts tied to sports and entertainment, and lawsuits and federal court cases that have already tested state and federal power.
- The Trump family’s ties to Polymarket and Kalshi have added to the scrutiny as Congress reinvestigates the market sector.
According to Trump’s Truth Social post late Tuesday, keeping the Commodity Futures Trading Commission in charge is “very important” as the US works to establish national rules for futures contracts. He said his administration was creating “road rules” and said countries should not control the sector.
Trump also criticized former New Jersey Governor Chris Christie, New York Attorney General Letitia James, Minnesota Governor Tim Walz, and Illinois Governor JB Pritzker. In the same post, he said other countries are chasing a new financial market and added that the US wants to stay ahead.
The CFTC is pushing back against federal regulators
The argument centers on whether speculative markets linked to sports and entertainment should be considered financial contracts or gambling products. The CFTC has argued that contracts listed on fixed-term contract markets fall under federal supervision.
CFTC Chairman Michael Selig has supported that position, and Trump’s letter is consistent with the agency’s view. The regulator has filed lawsuits and amicus briefs against several states that have tried to limit or challenge operators of prediction markets.
State officials took a different decision. They argue that some futures market contracts work like gambling and should be subject to state gaming laws.
James has filed lawsuits alleging other sites violate federal gambling laws. Illinois has sent a cease and desist notice, while Minnesota recently passed a law with criminal penalties for operating prediction markets. Christie also defended the country’s ability to regulate gambling products, comparing it to betting markets.
The court battle may reach the Supreme Court
Several cases have reached the appeals courts. The dispute may eventually reach the US Supreme Court if lower courts continue to divide federal and state power.
At the same time, the House of Representatives confirmed the investigation in the prediction markets. The investigation comes as crypto-linked companies and platforms tied to Trump allies are seeking permits linked to the operation of prediction markets.
The Trump family has links to this industry. Donald Trump Jr. he works as a consultant for both Polymarket and Kalshi, two major providers of the prediction market.
Gemini, a crypto exchange founded by Cameron and Tyler Winklevoss, also launched a prediction market platform. Both Winklevoss brothers have publicly endorsed Trump, and Gemini recently filed for parlay-style contracts.
Trump also referred to his campaign promise to make the United States a “crypto capital.” His position came as several countries, including Indonesia, Spain, and India, have moved to ban prediction markets from operating in their markets.
The regulatory battle also puts more pressure on speculative market operators as they seek government approval while facing state-level challenges. Any final court decision could shape how platforms list contracts related to elections, sports, entertainment, and crypto events in the US market.
