Trump Jr. leaves Kalshi as CFTC's Nov. 18 comment deadline looms

Donald Trump Jr. is done advising Kalshi. The prediction market had him on as a paid adviser, but that arrangement ended this week — because his investment firm, 1789 Capital, raised its stake in Polymarket, Kalshi's biggest rival. It's a loud headline. It's also not the fight that matters most.

The comment window on two CFTC rules closes Nov. 18. The agency put both forward on Oct. 19: one is still a proposal, the other is already in force but still collecting public feedback. Once the deadline passes, the CFTC can weigh what it heard and decide what comes next. One path gives federally approved prediction markets more room to grow. The other tightens which events users can trade.

Underneath sits a definitional brawl. The CFTC argues many prediction market contracts are derivatives — financial tools whose value comes from something else — and belong under federal rules, which would hand firms a single nationwide rulebook. States counter that a contract on a football game looks like a sports bet, long their turf, and worry federal rules could be used to dodge state gambling laws. Courts have yet to pick a side.

They're already brawling in court. On Nov. 12, the Justice Department and the CFTC sued Arkansas to block it from using its gambling laws against federally regulated prediction markets. Arkansas had already sued Kalshi, claiming it offered illegal gambling without a state license. The feds lean on that Oct. 19 rule to make their case. Earlier this year, the CFTC sued Arizona, Connecticut and Illinois over similar attempts to control prediction markets inside their borders.

Federal oversight wouldn't mean a free pass. This week the CFTC said it may bring charges against Kalshi over how it filed notice of new contracts. Kalshi calls it a filing error and says it's fixing it.

Money has already piled in. Last year Intercontinental Exchange, the firm that owns the New York Stock Exchange, agreed to invest up to $2 billion in Polymarket. Per Weiss Ratings, the prize wasn't just the trades — it was the data.