Minnesota state authorities have accused President Donald Trump of actively trying to regulate prediction markets for personal gain in a new court filing as part of their legal battle with the industry.
The document was filed in the state’s cases against Kalshi, Polymarket, and the Commodity Futures Trading Commission (CFTC). All three had filed lawsuits against Minnesota in response to the state’s ban on prediction markets.
The filing argues that the CFTC is not authorized to regulate wagering on sports, politics, cultural, or social events. As such, federal laws do not preempt state authority, and the ban on these markets should entail that operators such as Kalshi and Polymarket are prohibited from offering them to Minnesota residents.
Document Calls Out Trump
In addition to its arguments that the CFTC does not supersede state laws, the filing notes Trump’s shifting stance on prediction markets, highlighting remarks he made in April, in which he said he did not like the emergence of betting on anything.
It links to a video where Trump said, “In 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.”
The court filing notes, “Despite President Trump seeming to acknowledge that simple truth—that many
wagers offered on prediction markets turn the world into a casino—the Trump Administration is nonetheless actively fighting to deregulate the prediction market industry as quickly as it can.”
Trump quickly reversed his stance on prediction markets. He wrote in a social media post that it is “critically important” that the CFTC retains “exclusive authority” over prediction markets and called Minnesota Governor Tim Walz, among others, “SCUM” for trying to set rules.
Filing Hints at Trump’s Conflict of Interest
The document goes on to note that, “web-based companies have announced plans to add prediction market betting to their platforms, including Trump Media and Technology Group’s social media company, Truth Social.“
The implication is that Trump is actively deregulating the industry, while his business interests are benefiting. Trump Media partnered with Crypto.com and announced plans last year to launch its own prediction market platform, Truth Predict.
The venture, however, has not yet come to fruition. Reports last month suggested that Trump Media has scaled back its plan to operate a standalone platform and will instead focus on expanding the Crypto.com partnership through OG.com.
In addition to Trump Media’s collaboration with prediction markets, Trump’s son, Donald Trump Jr., has also invested in Polymarket through his venture capital firm and serves as a strategic advisor to both Kalshi and Polymarket.
The New York Times published a piece last month detailing how the CFTC has quashed any attempts to regulate prediction markets under the Trump administration. This includes getting rid of employees who attempted to raise questions over the operations of licensed operators.
Kentucky & CME File Lawsuits
Each week sees new lawsuits filed in the battle over whether prediction markets are legal. Last week, Kentucky became the latest state to file a lawsuit against operators. The state sued Kalshi and Polymarket, claiming they are “operating illegal sportsbooks and breaking our laws.”
In addition, CME, the prediction market platform that has partnered with FanDuel, filed a lawsuit against the CFTC for failing to block perpetual futures markets.
The CFTC approved Kalshi’s bitcoin perpetual futures, or “perps,” markets last month. These are futures contracts with no expiration date that allow traders to speculate on the price without owning the underlying asset.
CME CEO Terrence Duffy said the markets should be considered swaps under the Commodity Exchange Act (CEA) and should go through CME, as it has an “exclusive license with every single provider of the benchmarks.”
Duffy added that he was ready for the fight. In comments to CNBC, he stated, “I’ve never shied away from one, and I won’t shy away from this. I’m prepared, and I will be prepared to go through this.”
The issue may be different from the subject of most other legal battles, but the sentiment is the same. Expect plenty more court cases before anything is resolved.
