Trump Backing of CFTC Unlikely to Shift Prediction-Market Fight

TD Cowen's Washington Research Group assessed that President Donald Trump's public backing of the Commodity Futures Trading Commission's authority on prediction markets is unlikely to change the legal battles over event contracts. Trump wrote on Truth Social that it is “critically important” the CFTC has exclusive authority over prediction markets.

The post came as platforms such as Polymarket and Kalshi face lawsuits from several states that characterize certain contracts as illegal gambling. The central legal question is whether event contracts, including sports and political markets, are preempted by federal commodities law or subject to state gambling rules.

Jaret Seiberg, managing director at TD Cowen, wrote that it was not surprising Trump supported CFTC Chair Michael Selig's advocacy for prediction markets and Selig's contention that states lack the power to block event contracts on sporting events. Seiberg noted the social media post appeared aimed at defending the agency amid recent scrutiny of its handling of crypto and prediction markets. He added that the post was unlikely to end political interest in the matter.

Seiberg expects the dispute to move through the courts and ultimately to the Supreme Court to decide whether Congress displaced state authority when it authorized event contracts. He indicated TD Cowen continues to favor the states in the dispute, noting states have long regulated sports gambling. Litigation could take two years or longer to fully play out, he said.

On Capitol Hill, lawmakers have expressed frustration with the industry, increasing legislative risk, Seiberg wrote. He does not expect Congress to pass comprehensive legislation before the Supreme Court rules on state authority for sports-related event contracts. That timing could push significant federal action into 2027 or later and make the 2028 election a potential flashpoint for policy risk facing prediction-market firms.

Separately, the White House is reviewing a CFTC proposal that would establish rules for prediction markets and event contracts; the plan is under review by the Office of Management and Budget and would later be opened for public comment. Seiberg expressed skepticism that the Clarity Act, a proposed bill to create a structure for crypto markets, will pass this year, citing current political controversies.

For market operators, the practical effect of the president's endorsement is limited for now. The legal status of many event contracts will be decided in state and federal courts, and those outcomes will determine whether platforms can continue offering sports and political markets without state-level interference. Litigation timelines, possible Supreme Court review and any future congressional action are likely to shape the industry's regulatory landscape over the next several years.