On Tuesday night, President Donald Trump in a Truth Social post said that it is “critically important” that the Commodity Futures Trading Commission (CFTC) keep “exclusive authority” over prediction market platforms. This is coming at a time when platforms like Polymarket, Kalshi, Robinhood and Crypto.com are coming under fire by regulators across the U.S. The CFTC is currently in active litigation against five states (Wisconsin, Illinois, Arizona, Connecticut, and New York) that tried to shut down prediction markets under state gambling laws. A coalition of 39 attorneys general, led by Nevada’s Aaron Ford and Ohio’s Dave Yost, has lined up behind Massachusetts in its parallel fight to block Kalshi’s sports contracts, arguing that Congress never meant to override centuries of state authority over gambling when it wrote the Commodity Exchange Act. Last week, we also saw Minnesota becoming the first state to criminalize prediction markets , with Governor Tim Walz signing a bill that imposes felony penalties for operating them. The main legal question at the heart of all of this is whether sports and entertainment contracts are derivatives or repackaged as some sort of glorified gambling products. That said, Trump named Chris Christie, Letitia James, Tim Walz, and JB Pritzker as the officials trying to break the federal framework, calling them “SCUM” and framing state pushback as a competitive risk against foreign rivals. “Other Countries are after this new form of Financial Market, and we want to remain at the top,” he wrote. For an industry that has spent two years operating in legal grey zones, that level of presidential air cover is a first. What Trump Actually Said and Why It Matters Now The post praises newly appointed CFTC chair Michael Selig, who is the only active commissioner in what is meant to be a five-person panel. Selig was appointed in December last year and has spent his first few months suing multiple states. The post clearly indicates that President Trump is giving a go ahead for Selig to continue pushing federal preemption as hard as he can. Another angle to this story is the fact that the president has a direct family and business stake in which the regulator wins the fight. Last October, Trump Media made an announcement that they were entering the prediction market sector via Truth Predict, a platform built into Truth Social through an exclusive arrangement with Crypto.com Derivatives North America, a CFTC-registered exchange. The Five-State Lawsuit Front and the 38-AG Counterpunch Since April, the CFTC has sued Arizona, Connecticut, Illinois, New York, and Wisconsin, arguing that event contracts traded on Designated Contract Markets fall under the Commodity Exchange Act and that states cannot enforce gambling laws against them. Arizona’s criminal case against Kalshi was already paused by a judge who said the federal preemption argument was likely to win. Wisconsin’s lawsuit targets Kalshi, Polymarket, Crypto.com, Robinhood and Coinbase for alleged felony violations of state gambling law. The state response has been just as aggressive. Nevada Attorney General Aaron Ford and Ohio AG Dave Yost authored an amicus brief, joined by 37 other attorneys general, backing Massachusetts in its fight to keep Kalshi’s sports contracts out of the state. The coalition flagged that more than $1 billion was wagered across 3.4 million Kalshi sports bets between January and June 2025, roughly 90% of it tied to sports outcomes. Their argument is straightforward: Congress never explicitly overrode state gambling authority, and the CFTC cannot invent that override out of a statute that doesn’t even mention gambling. What Happens Next Court watchers expect this to land at the Supreme Court within the next 12 to 18 months. Until then, prediction market platforms keep operating across most of the country with federal cover, while states like Minnesota actively criminalize them. Congressional pressure is also building, with the House Oversight Committee opening an investigation into Kalshi and Polymarket over insider trading concerns. Trump’s endorsement makes the federal position politically harder to walk back, but it does nothing to settle the underlying legal question. If you're reading this, you’re already ahead. Stay there with our newsletter .
