#TrumpBacksCFTCAuthorityOverPredictionMarkets Trump Backs CFTC’s “Exclusive Authority” Over Prediction Markets, Escalating State vs. Federal Legal War

Washington D.C. – In a fiery social media post that has intensified the regulatory battle over the future of online betting, former President Donald Trump has thrown his weight behind the Commodity Futures Trading Commission (CFTC), demanding that the federal agency retain “exclusive authority” over the rapidly expanding prediction market industry .

Trump’s statement on Truth Social comes as state regulators and the federal government find themselves locked in a high-stakes legal confrontation over whether platforms like Kalshi and Polymarket are financial derivatives or illegal gambling operations .

“It is critically important that the CFTC’s exclusive authority over Prediction Markets is maintained, and that they will thrive,” Trump wrote, declaring that his administration is setting the “Gold Standard” for regulation . He specifically lashed out at several state leaders attempting to crack down on the industry, referring to them as “scum” in an explosive attack on figures such as Illinois Gov. JB Pritzker, New York Attorney General Letitia James, and Minnesota Gov. Tim Walz .

The Core of the Conflict

At the heart of the dispute is the explosive growth of prediction markets, where users buy and sell contracts based on the outcome of future events—ranging from election results and interest rate decisions to sporting events .

· The Federal Stance (CFTC): Under the leadership of Trump-appointed Chairman Michael Selig, the CFTC argues that these contracts are derivatives subject to the Commodity Exchange Act. The agency views them as national financial markets that should operate under a unified federal framework .
· The State Stance: A coalition of states, including Minnesota, New York, and Arizona, argue these platforms are essentially sportsbooks operating outside state gambling laws. Minnesota recently became the first state to sign a law explicitly banning prediction markets, making it a felony to operate them .

The friction has resulted in active litigation across the country. The CFTC has filed lawsuits against at least five states—including Illinois, Arizona, and Connecticut—arguing that state gambling laws are preempted by federal jurisdiction .

Market Explosion and Insider Trading Fears

The regulatory urgency is driven by staggering financial growth. Weekly trading volumes on platforms like Kalshi have reportedly surged to over $3 billion, with the industry seeing cumulative trading volumes of approximately $44 billion in 2025 .

However, this growth has raised significant ethical and national security concerns. Recent reports have documented traders potentially profiting from non-public information regarding geopolitical events, including US military actions. In one high-profile case, an Army soldier was charged with insider trading after allegedly using classified information to profit from bets on the capture of a Venezuelan politician .

In response to these integrity issues, Kalshi recently suspended three political candidates for “political insider trading,” betting on their own races. The platform fined them and issued five-year suspensions, highlighting the difficulties of policing these nascent markets .

Political and Economic Ramifications

Trump’s defense of the industry has drawn sharp criticism from Democrats, who point to the financial interests of the Trump family. Donald Trump Jr. reportedly has ties to Polymarket, one of the industry’s top firms, while Trump’s own media company has launched a prediction market product .

Senator Chris Murphy (D-Conn.) accused the president of corruption, stating, “Trump and his family are making tons of money off these new prediction markets—and so of course he is leading the charge against consumer protections” .