The White House has begun reviewing a proposed CFTC rule on prediction markets, setting up a federal-state showdown over who gets to regulate platforms like Kalshi and Polymarket.
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White House reviews CFTC prediction market rule as 3 states push back
The White House's Office of Information and Regulatory Affairs on May 26 began reviewing a proposed Commodity Futures Trading Commission rule on prediction markets, a regulatory step that could determine how platforms such as Kalshi and Polymarket operate across the US.
"It is critically important that the CFTC's exclusive authority over Prediction Markets is maintained, and that they will thrive," President Donald Trump wrote on Truth Social on Tuesday, vowing to set "rules of the road" that are the "Gold Standard for the States."
The proposed rule, received by OIRA under Executive Order 12866, follows a March advance notice of proposed rulemaking in which the CFTC sought public comment on which event contracts — including those tied to elections, gaming and sports — may be prohibited as "contrary to the public interest." The filing does not include the text of the proposed rule, but the review signals the agency is advancing toward a broader federal framework for event contracts after months of legal and political disputes.
At stake is a fundamental jurisdictional question: whether prediction markets are financial markets subject to federal commodities law, or gambling operations subject to state gaming regulation. Trump and the CFTC argue the former, while a growing number of state officials from both parties argue the latter.
The Federal-State Divide
Minnesota Gov. Tim Walz, a Democrat, signed a first-of-its-kind law last week banning prediction market sites from operating in the state. The Trump administration responded by suing to assert the CFTC's authority. Illinois and New Jersey have also argued that sports-linked event contracts effectively function as online betting markets, while New York Attorney General Letitia James sued Coinbase and Gemini, alleging their prediction market platforms were "running gambling operations" in the state.
Kalshi and the CFTC have countered that designated contract markets regulated under federal commodities law fall under the agency's exclusive authority, a position Trump publicly endorsed.
Trump's Financial Ties
Trump and his family have financial ties to both the prediction market and crypto industries. His eldest son, Donald Trump Jr., has ties to Kalshi and Polymarket, the two most prominent event-contract platforms. Trump also owns a stake in World Liberty Financial, a crypto venture.
The president on Tuesday also vowed to protect the broader crypto industry, saying the US is "currently the Crypto Capital of the World" and that other countries are "trying diligently to replace us."
The CFTC's push for a federal framework comes as the agency has softened regulatory enforcement of digital currencies under the Trump administration, including by culling the commission's ranks and sidelining career officials, according to a New York Times investigation published Sunday.
The comment period from the March ANPRM will inform the final rule, which must clear OIRA review before publication in the Federal Register. The timeline for the rule's completion has not yet been disclosed.
This article is for informational purposes only and does not constitute investment advice.
[1] White House reviews CFTC prediction-market rule as Trump backs federal control[2] Trump pledges to protect the crypto industry and ensure prediction markets ‘thrive’ - NBC News[3] Prediction markets regulation proposal by CFTC eyed by White House[4] CFTC submits prediction markets plan to White House
