Trump Backs CFTC on Prediction Markets, Slams States

President Trump publicly backed CFTC jurisdiction over prediction markets and labeled state regulators who oppose that position "scum," escalating a federal-versus-state turf war over platforms like Kalshi and Polymarket.

Why It Matters

The president's intervention shifts the political weight firmly behind federal oversight, making it harder for state attorneys general and gaming commissions to enforce their own gambling statutes against prediction market operators. As of July 2025, at least several states — including New Jersey and Nevada — had been exploring whether event contracts on platforms like Kalshi constitute unlicensed sports wagering under state law, according to Decrypt. If the CFTC retains clear primacy, prediction market operators gain a single federal compliance path rather than a patchwork of 50 potentially conflicting state regimes. For crypto-native prediction platforms, that regulatory clarity could unlock broader U.S. user bases and institutional capital flows that have sat on the sidelines.

Context

Prediction markets occupy a legal grey zone: the CFTC has treated event contracts as derivatives under the Commodity Exchange Act, while state gambling regulators argue the products function as sports betting and belong under their licensing frameworks. Kalshi won a landmark federal court ruling in September 2024 permitting it to offer election contracts, a decision that emboldened the sector but intensified state-level resistance. The Trump administration has broadly signaled deregulatory intent across both crypto and financial derivatives, making CFTC alignment consistent with its wider policy posture.

What's Next

Watch for formal CFTC guidance — or a congressional rider — that explicitly pre-empts state gambling jurisdiction over event contracts, which industry groups have lobbied for through mid-2025. Any state that files suit challenging CFTC primacy will set up a federal court test that could define the sector's legal architecture for years. Gambling involves risk; regulatory outcomes remain uncertain.

Source: Decrypt