The White House Office of Information and Regulatory Affairs on Tuesday began reviewing proposed prediction market regulations submitted by the Commodity Futures Trading Commission, as President Donald Trump publicly supported the agency's claim to exclusive jurisdiction over the industry. The review comes amid escalating legal battles between the CFTC and five states—Wisconsin, Illinois, Arizona, Connecticut, and New York—over which authority controls platforms like Kalshi and Polymarket. States argue these platforms violate local gaming laws, while CFTC Chair Michael Selig asserts federal primacy under the Commodity Exchange Act. The dispute has intensified following concerns about insider trading on prediction markets tied to elections and military actions, with House oversight committees launching probes into suspicious trading activity.
Trump Intervention and Political Backlash
On Tuesday, Trump posted public support for CFTC Chair Selig, calling federal jurisdiction over prediction markets "critically important" and criticizing former New Jersey Governor Chris Christie, New York Attorney General Letitia James, Minnesota Governor Tim Walz, and Illinois Governor JB Pritzker. "Under my leadership, we are setting 'rules of the road' that are the Gold Standard for the States," Trump stated. "We cannot have SCUM like Chris Christie, Letitia James, Tim Walz, and JB Pritzker setting the rules!" Governor Pritzker responded on X, calling Trump "the most corrupt President in our nation's history" and stating Illinois acted "to prevent and ban insider trading with online prediction markets in our state." Trump tapped Selig to lead the CFTC last year.
CFTC Regulatory Framework and Guidance
In March, the CFTC released guidance outlining how exchanges should approach listing prediction market contracts. The guidance emphasized that exchanges designated as contract markets act as front-line regulators responsible for ensuring listed contracts are "not readily susceptible to manipulation" or abusive trading practices. A CFTC spokesperson told The Block in an emailed statement: "The Commission has transmitted its notice of proposed rulemaking on event contracts under Section 5c(c) of the Commodity Exchange Act to the Office of Information and Regulatory Affairs for review, consistent with the standard interagency process. We look forward to OIRA's review and will have more to say once that process is complete." The White House did not immediately respond to a request for comment.
State Legal Resistance
CFTC Chair Selig has sued five states over their attempts to restrict prediction market platforms. States have pushed back, arguing platforms violate local gaming and gambling laws, particularly those related to sports betting. The issue of whether states or the CFTC regulates prediction markets continues to play out in federal courts. Concerns over insider trading have grown as lawmakers probed prediction markets following suspicious trades tied to elections and U.S. military actions.
Conflict of Interest Concerns
Donald Trump Jr. invested in Polymarket through venture capital firm 1789 Capital and serves as a strategic advisor to Kalshi. Governor Pritzker referenced these ties in his response, stating Trump "wants to make sure states like ours can't regulate prediction markets so his family and administration can keep profiting."
Analyst Assessment
In a note on Wednesday, Jaret Seiberg, managing director at TD Cowen's Washington Research Group, said Trump's bid to join the fight to have the CFTC regulate prediction markets is unlikely to change the broader legal arguments over event contracts. The issue is before the federal courts, not the regulators or executive branch, Seiberg stated.
FAQ
What did the White House do on Tuesday regarding prediction markets?
The White House Office of Information and Regulatory Affairs received the CFTC's proposed rule on event contracts and listed it as pending review on its website.
Which states is the CFTC suing over prediction market regulation?
The CFTC has sued five states: Wisconsin, Illinois, Arizona, Connecticut, and New York.
What is Donald Trump Jr.'s involvement with prediction market platforms?
Donald Trump Jr. invested in Polymarket through venture capital firm 1789 Capital and serves as a strategic advisor to Kalshi.
