U.S. President Donald Trump has publicly backed his Commodity Futures Trading Commission Chair Michael Selig in his push to maintain exclusive authority over prediction markets, calling the issue 'critically important' for U.S. financial market competitiveness. According to The Block, Trump voiced support for Selig, whom he tapped to lead and is the sole leader at the derivatives regulator. 'It is critically important that the CFTC's exclusive authority over Prediction Markets is maintained, and that they will thrive,' Trump stated in his latest post. This public backing comes as Selig has argued that the agency has 'exclusive jurisdiction' over the burgeoning prediction markets, suing five states in the process, including Wisconsin, Illinois, Arizona, Connecticut, and New York. Trump's latest statement emphasizes that 'Under my leadership, we are setting 'rules of the road' that are the Gold Standard for the States,' signaling his administration's commitment to establishing comprehensive regulatory framework for the multibillion-dollar industry.
State attorneys general are significantly ramping up their investigations into prediction markets in response to perceived federal regulatory gaps. According to recent reports, New York Attorney General Letitia James has intensified her scrutiny of prediction markets, with her office launching multiple investigations into crypto and prediction market platforms. The New York AG's office has been particularly active, securing $4.3 million from a cryptocurrency company for defrauding investors and $24 million from crypto platform Nexo for operating illegally. James has also been investigating Galaxy Digital Holdings and other major crypto firms, with the state legislature passing S.B. S8901 in 2025-2026 to strengthen crypto enforcement powers. This intensified state-level activity comes as federal regulators face scrutiny over their handling of prediction market cases, with the CFTC recently reaffirming its exclusive jurisdiction over prediction markets in a Sixth Circuit amicus brief filed May 12, 2026.
The regulatory debate has intensified following reports of career officials being pushed out of the CFTC after raising concerns about companies with ties to the Trump family. According to The New York Times, officials who raised concerns about Polymarket, Crypto.com and other companies were removed from their positions. After these reports emerged, Sen. Richard Blumenthal, D-Conn., wrote on X that 'the CFTC has become a craven tool of prediction markets & shady crypto firms—ignoring national security risks while bullying state regulators & retaliating against staff attempting to enforce the law.' The clash adds to the wider debate over how federal oversight of prediction markets could reshape regulation across derivatives, sports-related contracts and crypto-linked platforms. The political scrutiny has created additional tension as the agency faces criticism for its handling of firms with business ties to the Trump family.
Trading on prediction markets has surged over the past year and a half as the Trump administration has embraced the industry, which allows customers to bet on various outcomes including political events, sports, and entertainment. According to The Block, this growth trajectory has intensified the regulatory debate, with states seeking to assert their authority over what they view as gambling activities. The surge in trading volume has made the prediction market regulatory framework increasingly critical for both market participants and regulators. Event-based trading platforms such as Polymarket and Kalshi have rapidly grown during the 2024 U.S. election cycle, particularly after the presidential election cycle, intensifying tensions between federal and state regulators over control and legality. The industry's expansion under Trump's administration has created a complex regulatory landscape where federal and state authorities are competing for jurisdiction over what they consider to be financial instruments versus gambling products.
The regulatory pressure extends beyond U.S. borders, with Indonesia, Spain and India banning prediction markets in the past week. According to Trump Social, Trump stated 'Other Countries are after this new form of Financial Market, and we want to remain at the top.' The U.S. government is also investigating prediction markets, with a House of Representatives committee investigation being confirmed last week. Over the weekend, The New York Times reported that the CFTC, under former Acting Chairman Caroline Pham, sidelined officials who raised concerns about approving crypto companies with ties to Trump's family businesses. The regulatory dispute now sits at the intersection of derivatives oversight, state enforcement powers and the rapid growth of event-based trading products, with the U.S. seeking to maintain its competitive edge in the global prediction market landscape.
