The White House is opening a new regulatory sequence around predictive markets. Donald Trump clearly supports the CFTC, while several American states want to maintain their power of control over these sensitive contracts.
In brief
- Trump supports CFTC on predictive markets.
- States contest this exclusive federal jurisdiction.
- The courts should decide the merits of the conflict.
Trump pushes the CFTC to the center of the game
Donald Trump defends federal jurisdiction over predictive markets and supports the CFTC in its desire to impose a single national framework. The subject is gaining momentum as Polymarket and Kalshi are already facing regulatory restrictions in Europe, proof that these platforms are no longer treated as simple financial curiosities.
This support is not neutral. It transforms a technical debate into a political standoff. On the one hand, Washington wants to avoid a patchwork of local rules. On the other hand, several states believe that these markets directly affect their gambling laws and consumer protection.
The CFTC therefore seeks to set a clear line. Contracts linked to real events would be regulated by the federal derivatives regulator. This approach would give more coherence to the market, but it would greatly reduce the room for maneuver of local authorities.
A battle between finance, politics and local law
Predictive markets are no longer a niche topic. They now intersect with finance, politics, sport and major public events. It is precisely this mixture that worries regulators. The more the sector grows, the blurrier the line becomes between forecasting tool, financial product and activity assimilated to gaming.
The CFTC has already hardened its position. She has challenged restrictions imposed by some states, including in cases designed to prevent local laws from being enforced against such contracts. This offensive illustrates a simple but explosive question: who decides?
If the answer falls to the CFTC, the States lose part of their power. If the states win, the sector will have to deal with different rules depending on the jurisdiction. For those involved, this would be a permanent legal headache.
The risk of an overly political market
Trump's support adds a layer of tension. The president presents federal jurisdiction as a way to establish strong rules. But its opponents also see it as a way of limiting the action of states opposed to these markets. The debate then leaves the regulatory terrain to enter that of partisan confrontation.
The problem, however, goes beyond Trump. Predictive markets pose a real question of trust. When contracts relate to elections, public decisions or international crises, the risk of manipulation becomes more visible. The CFTC itself emphasizes the need to avoid contracts that are easily manipulated or exposed to abusive practices.
This is where the matter becomes delicate. A market can aggregate useful expectations. But it can also create bad incentives. The more sensitive the event, the more precise the regulation must be. Otherwise, the displayed price risks being perceived as a reliable compass, while it remains the result of sometimes very concentrated financial interests.
A decision which will mainly fall to the courts
Despite Trump's position, the outcome will not depend only on the White House. The federal courts will have a central role. The president's political intervention can weigh on the public debate, but it does not alone resolve the legal arguments surrounding event contracts.
It is therefore a battle of competence before being a battle of market. The CFTC wants to assert its exclusive authority. States want to defend their local laws. Between the two, the sector is waiting for a clear signal to know under which regime it will have to evolve.
Basically, the United States is testing here its ability to supervise a new financing of the event. It's not just about platforms. It's a question of regulatory sovereignty. And as is often the case with emerging markets, the rule comes after the use, especially when Kalshi and Polymarket are already expanding their playing field towards crypto products.
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