Trump administration prediction market rule draws 44-state opposition
The Trump administration's proposed rule would assert federal authority over event contracts and bar states from interfering with them. The proposal, issued last month, covers prediction markets based on scores and win-loss outcomes. Lawmakers, Native American tribes, and consumer advocates are voicing strong opposition. A coalition of 44 states is demanding state-level regulation rather than federal oversight alone. Kalshi and Polymarket representatives did not immediately respond to requests for comment. A federal court temporarily blocked Minnesota's ban on prediction markets on July 28, siding with the administration.
The 44-state coalition transforms a routine rulemaking into a federalism clash with real stakes for platforms and traders. If the administration prevails, CFTC-registered venues like Kalshi and Polymarket gain a uniform federal floor and escape the geofencing maze they now navigate state by state. If the states win, platforms return to the current patchwork where Michigan demands halts while federal judges elsewhere block bans.
Traders face the same contract-voiding risk that already hit New York and Washington. The Minnesota injunction on July 28 shows federal courts may side with the administration, but that win is narrow and leaves room for rewritten state laws. Platforms must now comment on a rule that may itself be litigated before it takes effect, burning legal budget on a moving target.