‘Scum’: Trump attacks US states’ efforts to regulate prediction markets

Donald Trump wrote in a social media post on Tuesday it was “critically important” that the federal government retain control over the multibillion-dollar prediction market industry, as he cast a critical eye on state attempts to impose new restrictions.

The Commodity Futures Trading Commission (CFTC) should retain “exclusive authority” over prediction markets, Trump said.

Prediction markets allow users to make speculative bets on the outcome of events. Their meteoric rise in recent years has attracted attention from state governments, who view trading on prediction markets as gambling by another name, which in many cases would subject the activity to state gaming laws.

Industry leaders such as Kalshi and Polymarket, which make money by charging fees on transactions, describe prediction markets as a form of derivatives trading. Derivatives are contracts that allow traders to make bets on the future value of an asset.

The federal government has agreed in practice, regulating them through the CFTC, a government agency that oversees derivatives markets with the goal of protecting consumers from fraud.

Trump has said he “was never much in favor” of prediction markets. But he and his family are involved in the industry. His media company released a prediction market product last year, and his son Donald Jr has ties to two top prediction market companies, according to the New York Times.

Prediction market bets have also raised novel ethical problems, since people with insider knowledge and political influence have the ability to predict or shape the current events that now command billions in weekly trading.

In one prominent case, US army soldier Gannon Ken Van Dyke allegedly used classified information to make more than $400,000 on trades involving the capture of former Venezuelan president Nicolás Maduro after learning of the US military’s plans. Federal prosecutors indicted Van Dyke last month on several charges related to insider trading.

More than a dozen state governments have contemplated curbing prediction markets this year. Minnesota became the first state in the country to ban them last week.

“Prediction markets are designed to be addictive and prey especially on young people and low-income folks,” Minnesota attorney general Keith Ellison said in a statement. “They help the ultra-rich get richer and the rest of us get poorer.”