The White House is reviewing a proposed Commodity Futures Trading Commission rule that would tighten federal oversight of prediction markets, a move backed by President Donald Trump. The regulation could reshape how platforms like Kalshi and Polymarket operate, even as a growing number of states challenge the CFTC's authority over these markets.
Why the CFTC rule is under review
The CFTC's proposed rule aims to bring prediction markets under federal control, potentially banning or restricting event contracts that let users bet on outcomes like elections, sports, or economic indicators. Trump has publicly supported federal oversight, arguing that without it, these markets could be manipulated or used to skirt campaign finance laws. The White House review is a standard step before the rule can be finalized.
Prediction markets have exploded in popularity over the past few years. Platforms such as Kalshi and Polymarket allow users to trade contracts based on real-world events, drawing millions of dollars in volume. Regulators worry that unregulated betting on elections could undermine public trust in democratic processes.
States push back on federal oversight
Several states are pushing back against the CFTC's authority. They argue that prediction markets are essentially gambling, which has traditionally been regulated at the state level, not by a federal commodities agency. The legal challenges claim the CFTC is overstepping its jurisdiction under the Commodity Exchange Act.
If the states succeed, the rule could be blocked or watered down. The outcome will likely depend on how courts interpret the CFTC's mandate. For now, the agency is moving ahead, and the White House review signals that the Trump administration wants to settle the matter at the federal level.
What the rule means for Kalshi and Polymarket
For platforms like Kalshi and Polymarket, the stakes are high. Both have grown rapidly by offering event contracts that are not available on traditional exchanges. Kalshi, for instance, lets users trade on inflation data, Federal Reserve decisions, and election results. Polymarket focuses heavily on political and sports events.
The proposed rule could require these platforms to register with the CFTC, submit to stricter reporting rules, and limit the types of contracts they offer. Some analysts predict that certain contracts, especially those tied to elections, could be outlawed entirely. Neither Kalshi nor Polymarket has publicly commented on the review, but both have previously lobbied for clear federal guidelines.
The White House review is expected to take several weeks. Meanwhile, the state challenges are working their way through the courts, leaving the future of prediction market regulation unresolved.
