President Donald Trump has given his vocal support for the industry and declared Democrats opposing their expansion as ‘SCUM‘. But with the Democrats likely to win the next election, the whole industry could be upended in two years’ time.
Trump sent out his clearest message yet on prediction markets in a post on his social media platform, Truth Social. He singled out Democratic leaders who have taken action to address the rise of prediction markets, including New York Attorney General Letitia James, Minnesota Governor Tim Walz, and Illinois Governor JB Pritzker.
James filed lawsuits against Coinbase and Gemini, while both Walz and Pritzker signed off on legislation restricting prediction markets.
Meanwhile, Trump defended the CFTC and the chair he appointed to lead the organization, Michael Selig. The CFTC has responded aggressively against state regulators, filing lawsuits against Illinois and Minnesota, as well as Arizona and Connecticut. Democrats also rule the latter two states.
Trump Rolls Back Skepticism With Aggressive Stance
Trump had recently shown signs that his enthusiasm for prediction markets was waning. In the wake of a US soldier being arrested for wagering on the capture of Venezuelan leader Nicolas Maduro, Trump said he did not like how pervasive the industry has become.
“You know, the whole world, unfortunately, has become somewhat of a casino,” Trump stated. “And you look at what’s going on all over the world and Europe, and every place they’re doing these betting things. I was never much in favor of it. I don’t like it conceptually, but it is what it is now.”
Trump Media, which has partnered with Crypto.com, also rolled back plans to launch a Truth Predict platform. It is possible those plans could be reignited as Trump signaled his full support for the industry.
He was quick to soften his voice of dissent. Just two days after saying he “didn’t like it conceptually”, he said that he would not want to see the US left behind other countries.
His Truth post reiterated that he wants the US to be the leader in this new form of financial market. Other countries have largely opposed prediction markets, however. Spain and Indonesia became the latest nations to ban platforms this week, declaring them unlicensed betting.
Brazil had already blocked Kalshi, while Polymarket has been banished from over 33 countries. Unlike the US, with its patchwork of laws across states, other countries tend to take a single stance on prediction markets: they are gambling and should be regulated as such.
Party Lines Could Be Drawn
Several bipartisan bills have been introduced in Congress to restrict prediction markets. In Utah, Republican Senator John Curtis sponsored the “Prediction Markets are Gambling Act“.
Rep. Adrian Smith, a Republican from Nebraska, meanwhile, co-sponsored the PREDICT Act, which would impose further restrictions on who can trade on the markets.
The Senate has already approved a ban on its members’ wagering, but it’s unlikely that Trump will sign off on any of the more ambitious attempts to rein in the industry in Congress.
His post on Truth Social sparked a response from Democrats, including JB Pritzker. Pritzker posted on X, “The most corrupt President in our nation’s history wants to make sure states like ours can’t regulate prediction markets so his family and administration can keep profiting.”
If it becomes a clear issue dividing the two parties, it could be beneficial for prediction markets in the short term but detrimental in the long term.
Election Could Change Everything, Again
Kalshi currently gives a 61% chance that Democrats will win the 2028 election.
While it is early days, there is a strong indication that the Republicans will struggle to replicate success in 2024 without Trump.
It was the last election that led to Donald Trump Jr. joining Kalshi as a strategic advisor. He posted on X that Kalshi’s accuracy in predicting Trump’s win made him realize he had to contribute to their mission.
On Election night at Mar-a-Lago, while biased outlets called the race a coin toss, my family and close friends used the prediction market @Kalshi to know we won hours ahead of the fake news media.
— Donald Trump Jr. (@DonaldJTrumpJr) January 13, 2025
I immediately knew I had to contribute to their mission. Today, I am proud to…
He has since also joined Polymarket as an advisor and invested in the company through his venture firm, 1789 Capital.
Following Trump’s election victory, he nominated Kalshi board member Brian Quintenz to lead the CFTC. Amid criticisms from the Winklevoss twins, who run the prediction market platform Gemini, he changed his nomination to Selig.
During the Trump administration, the CFTC paved the way for prediction markets to advance, pushing back on internal attempts to strictly regulate companies, according to a recent New York Times report. Biden-appointed officials have been ousted, and the agency has defended licensees.
That suggests that if the Democrats win the 2028 election, as predicted, the CFTC would again be overhauled. Trump said his administration is “setting ‘rules of the road’ that are the Gold Standard for the States”, but these could all be reversed under a Democratic President.
Gavin Newsom is currently the most likely to lead the Democrats in the next election. He has received millions of dollars from tribal groups, which vehemently oppose prediction markets. If elected as President, it is highly likely he would take a tough stance on prediction markets offering wagering on sports, which tribes have taken particular exception to.
A Trump endorsement for prediction markets could therefore be a poisoned chalice.
