President Donald Trump reversed his recent criticism of prediction markets on Saturday, telling reporters that “very smart” people he knows support the industry, despite his Thursday comments characterizing the sector as contributing to turning “the whole world” into “somewhat of a casino.” The shift marks a notable policy recalibration just days after federal law enforcement arrested a U.S. soldier for allegedly using classified intelligence to profit over $400,000 from a Polymarket wager.
Trump’s Reversal on Prediction Markets
When asked by Decrypt about his earlier critical statements, Trump expressed uncertainty about his position: “Well, I don’t know. I know some people that are very smart. They like it, they disagree.” He emphasized that other countries are adopting prediction markets and suggested the U.S. risks being disadvantaged if it doesn’t follow suit. “A lot of other countries are doing it, and when the other countries do it, we get left out in the cold if we don’t do it,” Trump said. He added: “I know people that are in the prediction market business, and they’re pretty happy with it.”
Industry Scale and Growth
Prediction markets, which allow users to wager on outcomes ranging from crypto and traditional markets to sports, politics, and cultural events, now account for over $7 billion in weekly trading volume. The sector has experienced massive growth over the last two years, with top platforms achieving billion-dollar valuations.
Family and Administration Connections
Trump’s son, Donald Trump Jr., serves as an advisor to both Polymarket and Kalshi—America’s top prediction market platforms—and is also an investor in Polymarket. Additionally, Trump’s media company has launched Trump Predict, a tie-in feature integrated into Truth Social, his social media platform.
Regulatory Framework and Legal Disputes
Prediction markets operate as event contracts, a type of derivative legally classified as a commodity and regulated by the Commodity Futures Trading Commission (CFTC) at the federal level. The CFTC, chaired by Trump-appointee Mike Selig, has recently mounted a forceful legal defense of prediction market platforms facing lawsuits from states across the political spectrum. States argue that new types of prediction market wagers—particularly those related to sports, politics, and entertainment—violate state gambling laws. The platforms counter that all such wagers should be treated as event contracts under exclusive federal CFTC jurisdiction, not state regulation.
The CFTC’s aggressive campaign against state regulators has drawn attention on Capitol Hill, with lawmakers expressing concerns about the agency’s stance and its potential implications for insider trading prevention and the proliferation of unregulated gambling in the United States.
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