Trump Backs CFTC in Prediction Market Legal Battles
President Donald Trump has reiterated his support for the Commodity Futures Trading Commission (CFTC) maintaining exclusive authority over prediction markets, emphasizing the need to prevent state-level regulators from undermining federal oversight. This comes as the CFTC faces multiple legal challenges from states seeking to regulate or ban these platforms under existing gambling laws.
Trump’s Stance on CFTC Authority
In a post on Truth Social, Trump stated that it is “of fundamental importance” for the CFTC to retain its “exclusive authority” over prediction markets. He criticized state officials, including New Jersey Governor Chris Christie, New York Attorney General Letitia James, Illinois Governor J.B. Pritzker and Minnesota Governor Tim Walz, for attempting to “set the rules” on a federal issue. Trump framed the debate as a matter of national competitiveness, noting that “other countries are interested in this new form of financial market and we want to stay on top.”
Legal Challenges and State Actions
The CFTC is currently embroiled in lawsuits with five states—Arizona, Connecticut, Illinois, New York, and Wisconsin—over its jurisdiction to regulate prediction markets. These states argue that such platforms fall under their gambling laws, while the CFTC contends they are governed by the Commodity Exchange Act. In April, a judge in Arizona temporarily halted a state lawsuit against Kalshi, citing the CFTC’s strong claim to federal preemption.
The Minnesota legislature recently became the first to criminalize prediction markets, imposing penalties for operating such platforms. Governor Tim Walz signed the law, marking a stark contrast to the CFTC’s federal stance.
CFTC Chair Michael Selig’s Role
Trump’s post explicitly endorsed Michael Selig, the CFTC’s acting chairman, who has been actively pursuing legal action against states. Selig, appointed in December 2025, has prioritized asserting the CFTC’s authority, including filing suits against platforms like Kalshi, Polymarket, and Crypto.com. The CFTC’s legal strategy hinges on the argument that prediction markets are derivatives, not gambling, and thus fall under federal regulation.
State Coalition Challenges CFTC’s Jurisdiction
A coalition of 39 state attorneys general, led by Nevada’s Aaron Ford and Ohio’s Dave Yost, has filed a legal opinion supporting Massachusetts’ efforts to block Kalshi’s sports betting contracts. They argue that the Commodity Exchange Act does not explicitly grant the CFTC authority over prediction markets, emphasizing that Congress has not overridden state gambling laws. This coalition highlights over $1 billion in wagers placed on Kalshi’s sports contracts between January and June 2025.
Future Outlook
Legal experts anticipate the dispute will reach the U.S. Supreme Court within 12–18 months. Until then, prediction markets will operate under federal protection in most states, while jurisdictions like Minnesota actively criminalize them. The issue has also drawn congressional scrutiny, with the House Oversight Committee investigating Kalshi and Polymarket for potential insider trading. Trump’s vocal support for the CFTC complicates any federal reversal but does not resolve the underlying legal questions.