The battle for the prediction markets is intensifying after the president Donald Trump met with the CFTC
The CFTC has put a proposed rule on futures contracts under White House review as federal and state officials battle over who should regulate the fast-growing industry.
Summary
- The CFTC’s proposed market speculation rule is subject to review by the White House before it is released for public comment.
- The law may create the first comprehensive organizational framework for event contracts and affect platforms such as Kalshi and Polymarket.
- Trump has supported CFTC regulation of futures markets, while Illinois Governor JB Pritzker has defended federal action against insider trading.
Bloomberg first reported that the proposal is now before the White House Office of Management and Budget, a step ahead of the Commodity Futures Trading Commission’s release of the plan for public comment. The details have not been published.
CFTC pushes for event contract rules
The proposed rule is expected to emerge from the CFTC’s spring consultation, which drew more than 3,000 public comments. Those answers include insider trading, restrictive covenants, market protections, and the legal framework for event contracts.
If passed, the legislation would give the US its first comprehensive framework for futures market contracts. It could also affect how platforms like Kalshi and Polymarket serve US users, especially as the industry faces growing legal pressure from the country’s regulators.
At issue is whether contracts related to elections, sports, and public events should be treated as federally regulated derivatives or as gambling products subject to state law.
States challenge federal control
Nevada, New Jersey, Maryland, Ohio, Montana, Illinois, and other states have taken action against prediction market operators. State officials have argued that some contracts are similar to sports betting or other gambling products and must follow local gaming, tax, and consumer protection laws.
Kalshi and other operators say their event contracts are permitted under the Commodity Exchange Act. State regulators have rejected that idea in several arguments, saying that federal approval should not prevent enforcement of state gambling laws.
The question now goes to the courts, where judges are divided on whether the CFTC’s powers exceed the state’s gaming authority. Those conditions can change how many rooms should be managed by platforms that count event-based contracts.
Pritzker criticizes Trump for prediction markets
President Donald Trump waded into the fray on Tuesday, publicly backing Brian Selig and saying the CFTC should have special jurisdiction over futures markets. Trump said the issue was “extremely important” and imposed federal regulation as needed through clear national laws.
In his post, Trump also attacked former New Jersey Governor Chris Christie, New York Attorney General Letitia James, Minnesota Governor Tim Walz, and Illinois Governor JB Pritzker. Trump said his administration is imposing “rules of the road” on states and using harsh language against officials.
Illinois Governor JB Pritzker responded with X, saying that Illinois has taken action to stop and ban insider trading in online prediction markets. Pritzker accused Trump of trying to stop states from regulating the industry so that people close to him could benefit.
Donald Trump Jr. has a relationship with this industry. He has invested in Polymarket through venture capital firm 1789 Capital and works as a strategic advisor to Kalshi.
