U.S. President Donald Trump has softened his rhetoric on prediction markets just days after criticizing their rapid rise — a shift that could reverberate across a sector already grappling with explosive growth and growing legal scrutiny. What he said - Speaking to reporters in Florida on Saturday, Trump acknowledged that experienced participants back these platforms even as he remained cautious: “I don’t know. I know some people who are very smart. They like it,” he said, adding, “They disagree, but they like it.” - He also cited international adoption as a factor, warning that “a lot of other countries are doing it, and when the other countries do it, we get left out in the cold if we don’t do it.” - Earlier in the week at the White House, Trump had been more critical, lamenting that “the whole world, unfortunately, has become somewhat of a casino,” and saying, “I don’t like it conceptually, but it is what it is.” Why it matters - Prediction markets — platforms where users bet on outcomes ranging from elections to sports and geopolitical events — have seen surging activity. According to Token Terminal, Polymarket and Kalshi posted a combined $23.6 billion in trading volume in March, a monthly high. - That growth has put the sector at the center of a high-stakes legal and regulatory battle over whether these contracts are commodities (regulated federally) or wagers (subject to state gambling law). The legal landscape - The Commodity Futures Trading Commission (CFTC) has escalated the fight: it filed suit against New York in the U.S. District Court for the Southern District of New York, arguing federal law gives the agency exclusive authority over event-based contracts listed on registered exchanges. CFTC Chair Michael Selig said CFTC-registered exchanges “have faced an onslaught of state lawsuits seeking to limit Americans’ access to event contracts and undermine the CFTC’s sole regulatory jurisdiction over prediction markets.” - New York state authorities have taken a different tack, bringing actions against Coinbase and Gemini for alleged violations of state gambling rules and challenging Kalshi’s sports-related products. - A coalition of 37 states and Washington, D.C. has filed court briefs arguing federal financial law was not intended to allow nationwide sports betting without state oversight. - Wisconsin prosecutors expanded enforcement in Dane County by filing complaints against several firms — including Crypto.com, Polymarket, Kalshi and distribution partners Coinbase and Robinhood — asserting that fixed-payout positions on real-world outcomes meet the state’s legal definition of wagering. “Thinly disguising unlawful conduct doesn’t make it lawful,” Attorney General Josh Kaul said. - Parallel enforcement actions — bans, suits and cease-and-desist orders — have also emerged in Nevada, Massachusetts and Illinois. Court filings in many cases describe contracts tied to sports and elections as indistinguishable from traditional betting, while platform operators counter that their products fall under federal commodities law. Corporate and political ties - As the market expands, notable political and corporate links have emerged: Donald Trump Jr. joined Polymarket’s advisory board after investing in the platform in August, and he later accepted a similar advisory role at Kalshi in January 2025. - Trump Media announced plans in October to offer prediction-market products on its Truth Social platform in partnership with Crypto.com. Trump transferred his stake in Trump Media to a trust upon entering office, with Trump Jr. named as sole trustee. Bottom line Trump’s slightly softer public posture shifts little of the immediate legal reality: prediction markets are booming, but regulators and state attorneys general are intensifying challenges that could shape whether these products are regulated as commodities or treated as gambling. For crypto and prediction-market participants, the coming court battles and regulatory rulings will be pivotal in deciding how — and where — these platforms can operate. Read more AI-generated news on: undefined/news