The White House Office of Information and Regulatory Affairs has begun reviewing a proposed rule from the Commodity Futures Trading Commission (CFTC) that would set a federal framework for prediction markets, while President Donald Trump is openly backing the agency’s claim of exclusive authority over these markets in a widening clash with several U.S. states.
The proposed rule, which focuses on event contracts under Section 5c(c) of the Commodity Exchange Act, is now listed as pending review. The CFTC said it will release more information once the White House process is complete. The administration has not provided a timeline or commented on the substance of the proposal.
Regulatory push follows mounting concerns over insider trading
The CFTC has spent the past year working to clarify its jurisdiction over prediction markets, platforms where users wager on real‑world outcomes such as elections, sports, digital assets, and geopolitical events.
In March, the agency issued guidance requiring exchanges that host these markets to prevent manipulation and abusive trading practices. Lawmakers have since raised concerns about insider trading tied to contracts referencing elections and U.S. military activity, prompting the CFTC to bring several enforcement cases and issue compliance notices.
The newly submitted rule is expected to formalize a comprehensive framework for event contracts. It follows a spring consultation that drew more than 3,500 comments on issues including insider trading, market integrity, and which classes of contracts should be banned outright.
Federal–state power struggle intensifies
CFTC Chair Michael Selig has argued that prediction markets fall under exclusive federal jurisdiction, relying on federal commodities law to assert authority over these platforms. The commission has filed lawsuits against Wisconsin, Illinois, Arizona, Connecticut, New York and other states after they moved to restrict access to certain markets under state gaming and consumer protection laws.
The disputes center on whether state gambling and public protection statutes can override federal commodities regulation. The conflict escalated further when Minnesota became the first state to pass a law making the operation of a prediction market a felony. The CFTC immediately sued to block the law before its August 1 effective date, arguing that it conflicts with federal law.
Trump backs Selig, attacks state officials
Trump on Tuesday issued his strongest public endorsement yet of the CFTC’s position, saying the commission should retain sole control over prediction markets. He praised Selig’s leadership and criticized state officials including New Jersey’s Chris Christie, New York Attorney General Letitia James, Minnesota Governor Tim Walz, and Illinois Governor JB Pritzker for attempting to limit access to these platforms.
Trump’s latest comments mark a shift from his more cautious tone just a month earlier, and come as the rulemaking advances inside the administration.
State leaders, however, argue that the White House and the CFTC are overriding legitimate state interests in policing gambling and protecting consumers. Pritzker said on social media that Illinois’ actions aim to prevent insider trading and market corruption, accusing Trump of trying to shield his family and associates from state-level scrutiny.
Trump family ties to prediction market firms
Donald Trump Jr. has disclosed financial stakes in prediction market companies through venture capital firm 1789 Capital and serves as an adviser to one such platform. These ties have sharpened political debate over how event contracts should be overseen and whether federal policy could benefit firms linked to the president’s family.
Market growth raises stakes of legal outcome
The jurisdictional fight is unfolding as the prediction market sector expands rapidly.
Combined monthly trading volume on the two largest platforms rose from under $5 billion in September 2025 to about $24 billion by April 2026. One analysis estimated nominal trading volume at $25.7 billion in March 2026 alone, with projections pointing to potential annual volume of roughly $240 billion for the year.
Contracts tied to sports, politics, and digital assets account for about 90% of activity on major platforms since mid‑2024. In the first quarter of 2026, sports‑related contracts generated $10.1 billion in volume, while political markets added about $5 billion, indicating sustained participation beyond election years and into ongoing global events.
Courts expected to decide jurisdictional boundaries
Despite Trump’s vocal support for federal control, analysts at TD Cowen’s Washington Research Group say his intervention is unlikely to shift the core legal questions now before the courts.
They argue that federal judges, not regulators or the White House, will ultimately decide how authority over prediction markets is divided between Washington and the states, once the current White House review and CFTC rulemaking are completed.
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