Recently, Trump publicly released a major regulatory signal, clearly stating that federal officials’ insider betting in prediction markets will be thoroughly investigated. In an instant, a prediction market segment that had been quietly rising was pushed to the forefront of public opinion and regulatory scrutiny.
In his public remarks, Trump said bluntly that “the whole world is a bit like a casino” at the moment, clearly making known his stance against gambling. Meanwhile, the chaos in which officials use insider information to place bets in prediction markets became the main target of this crackdown. Such illegal conduct that takes advantage of special information asymmetries not only undermines the market’s fair order, but also breeds risks of power-for-profit arrangements and gray-area transactions—also a key reason behind the government’s determination to tackle these issues.
However, behind this regulatory development lies a cloud of highly controversial allegations of conflicts of interest. According to media reports, Trump’s son holds shares in the prediction market platform Polymarket and also serves as an adviser to Kalshi. These two platforms are exactly the core players in the prediction market segment in recent times. During the critical period of heightened tension in the U.S.-Iran situation, Polymarket-related event prediction markets saw their market value once exceed $100 million, while trading volume and overall market enthusiasm surged. On one side, Trump is publicly cracking down on violations in prediction markets; on the other, his relatives are deeply tied to leading platforms and have been deeply involved in industry planning. The resulting dual-position stance has drawn widespread questions from the public, and the dispute over vested interests continues to intensify.
Of note is that just before the controversy started to gain momentum, Polymarket and Kalshi—two major mainstream prediction market platforms—had simultaneously announced the launch of perpetual contract products. Their intention was to further expand business boundaries, enlarge the market scale, and accelerate the expansion of the segment. The rollout of new products was supposed to be an important signal of industry upgrades, but Trump’s sudden regulatory remarks directly pressed the brakes on industry development. Soon after, the shadow of tighter regulation quickly spread across the entire segment.
Prediction markets center on betting on event outcomes. With flexible trading mechanisms and trading targets that track current events, the segment has rapidly attracted large amounts of capital and users in recent years. In particular, during hot-button events such as geopolitical and international developments, deal volume has repeatedly surged. But for a long time, the segment has continued to hover in regulatory ambiguity. Problems such as insider trading, loopholes in rules, and a tendency toward gambling have accumulated day by day, and compliance risks have long been buried.
Trump’s targeted crackdown on insider betting by federal officials is by no means a single short-term enforcement effort. It also indicates that a globally stricter era for prediction markets may be accelerating. On the one hand, the behavior of public officials participating in gray-area bets will be tightly constrained, cutting off any improper collusion between power and the market. On the other hand, the business expansion plans of leading platforms may be limited, and the compliance of innovative products such as perpetual contracts will face comprehensive scrutiny. The era of rampant, unrestrained industry growth is officially drawing to a close.
With one side driven by the demand for industry innovation and development and the other constrained by the hard requirements of compliance and regulation, prediction markets are about to face a new round of reshuffling. Whether conflicts of interest can be clarified, how platform innovation can align with regulatory rules, and how ordinary users’ trading rights can be protected will all become key points to watch in the next phase of industry development. Trump’s statement is only the beginning of tighter regulation. In the future, the compliance-driven transformation of prediction markets is inevitably going to involve games and adjustments, and the segment’s subsequent direction is worth continuous attention.
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