The political fight over prediction markets is heating up
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- The Trump administration is coming out swinging on the side of prediction markets.
- The top federal regulator is seeking to protect the companies from state-level regulation.
- That's generating blowback, including from some in the GOP.
Prediction markets like Kalshi and Polymarket have a powerful new ally: the Trump administration.
Commodity Futures Trading Commission Chairman Michael Selig, the country's top federal regulator of prediction markets, came out hard in favor of prediction markets in a video posted to X on Tuesday.
"Today, the CFTC is taking an important step to ensure that these markets have a place here in America," Selig said.
The most immediate move Selig made was filing a brief arguing that the federal government — not the states — has the authority to regulate prediction market platforms. It comes as states continue to file lawsuits to stop prediction markets from operating what they argue are illegal sports betting platforms.
That was music to the industry's ears.
"We agree with Chairman Selig — the CFTC has regulated these markets for decades, and they are best equipped to ensure market integrity," a spokesperson for The Coalition for Prediction Markets told Business Insider.
But Selig didn't simply make an argument about who has the authority to regulate prediction markets.
He also praised the markets themselves, saying that they "provide useful functions for society," including "hedging commercial risks" and serving "as an important check on our news media and our information streams."
It comes amid a wider debate over the role of prediction markets in society, with concerns about potential insider trading and the proliferation of gambling increasingly defining the debate.
Several lawmakers told Business Insider recently that they have concerns about the prediction markets, with some even likening them to a "scam."
"I find something concerning about the gamification of every aspect of human existence," Democratic Rep. Ro Khanna of California said at the time.
After Selig signaled that he would be siding with prediction markets, a group of 23 Democratic senators sent a letter to the CFTC chairman asking him to reverse course and allow legal battles to play out.
And it's not just Democrats who are worried about prediction markets.
In response to Selig's video, Republican Gov. Spencer Cox of Utah vowed to fight the federal government in court while painting a dark picture of the markets themselves.
"These prediction markets you are breathlessly defending are gambling—pure and simple," Cox wrote on X. "They are destroying the lives of families and countless Americans, especially young men. They have no place in Utah."