Trump Demands Federal Control of Prediction Markets, Slams State Bans as 'Scum'

Former President Donald Trump has forcefully intervened in the escalating regulatory battle over prediction markets, advocating for exclusive federal oversight and denouncing state-level efforts to restrict the fast-growing industry. In a social media post on Tuesday, Trump declared it "critically important" that the Commodity Futures Trading Commission (CFTC) retain control, while launching a personal attack on state officials backing bans. "We cannot have SCUM like Chris Christie, Letitia James, Tim Walz, and JB Pritzker setting the rules!" he wrote, framing the issue as a matter of national economic competitiveness. The controversy centers on the fundamental classification of prediction markets, where users place speculative bets on future events. Platforms like Kalshi and Polymarket, which profit from transaction fees, argue their products are derivatives—financial contracts regulated federally by the CFTC. Conversely, numerous state governments view the activity as gambling, subject to local prohibitions. This clash reached a tipping point last week when Minnesota became the first state to outlaw the markets, with Attorney General Keith Ellison condemning them as "addictive" operations that "prey especially on young people and low-income folks." The CFTC filed a lawsuit to overturn the ban the following day. Trump's stance introduces a complex political dimension, given his stated personal skepticism of prediction markets alongside his family's ties to the sector. His media company launched a prediction market product last year, and his son, Donald Trump Jr., has reported connections to two major firms. The industry's explosive growth—with weekly trading volume on Kalshi alone surging from $100 million to over $3 billion—has been shadowed by significant ethical and legal breaches. In a prominent case, a U.S. Army soldier was indicted last month for allegedly using classified information to make more than $400,000 on trades related to a planned military operation. The regulatory path forward remains uncertain. While Trump's statement aligns with industry desires for a uniform federal framework, opposition is bipartisan. Minnesota's ban passed with support from both parties, and Republican-led states like Utah, with strict anti-gambling statutes, are also considering curbs. As the CFTC's lawsuit proceeds, the debate pits concerns over consumer protection and moral hazard against arguments for financial innovation and federal supremacy, setting the stage for a protracted legal and legislative conflict.