Donald Trump Jr. Urges State Officials to Back Off Prediction Market Regulation
Washington, Thursday, 27 August 2026.
Donald Trump Jr. advised state attorneys general to leave prediction market regulation to federal authorities, despite holding financial stakes in key platforms backed by controversial emergency federal interventions.
Private Advice to State Attorneys General
On August 27, 2026, reports emerged revealing that Donald Trump Jr. privately advised Republican state attorneys general against regulating prediction markets during a conference in New Orleans in March 2026 [1][4]. The intervention, disclosed by The New York Times, highlights the growing tension between state-level regulatory efforts and federal oversight claims surrounding platforms like Kalshi and Polymarket [4][5]. Trump Jr. argued that state leaders were being misled by gambling companies seeking to protect their monopolies, asserting that federal authorities should exclusively oversee event contract exchanges [1][2]. A spokesperson for Trump Jr. stated that his comments were limited to a single question during a Q&A session and lasted approximately one minute [1].
Financial Interests and Federal Oversight
Donald Trump Jr. holds financial stakes in the industry, serving as an advisor to Kalshi since January 2025 and holding a stake in Polymarket through his firm, 1789 Capital [3][5]. Kalshi states his input is limited to marketing strategy, while Trump Jr.’s spokesman claims he does not interface with the federal government on behalf of companies he advises [1][6]. This advice aligns with President Donald Trump’s May 2026 statement via Truth Social asserting that the Commodity Futures Trading Commission (CFTC) should hold exclusive authority to ensure prediction markets thrive under federal rules [2]. The President described these federal regulations as the Gold Standard for the states, emphasizing the administration’s stance on jurisdiction [2].
Escalating Federal-State Legal Conflict
Regulatory disputes have intensified, with 20 states currently involved in litigation against prediction market platforms regarding sports gambling laws [3][4]. In late July 2026, a coalition of 44 attorneys general formally challenged the CFTC’s authority over sports-related event contracts, characterizing the markets as a new form of casino [1][3]. The CFTC has responded aggressively, suing nine states with Democratic governors in 2026, marking the first time the agency has sued state governments since its 1974 founding [3][4]. Furthermore, the agency invoked rare emergency powers in July and August 2026 to instruct Kalshi to ignore state court orders in Michigan and New York, claiming compliance would shatter public confidence [6].
Legislative Influence and Future Outlook
Legislative influence is evident in North Carolina, where a state budget provision established a 6% tax rate for prediction markets compared to a 23% rate for sportsbooks, a provision a Kalshi lobbyist helped draft [1][6]. This tax rate represents a significant reduction, calculated as 26.087 percent of the sportsbook rate, highlighting the favorable treatment compared to traditional gambling operators [1]. The legal battle is expected to reach the Supreme Court, with the White House likely to oppose state-level restrictions [3]. As of August 27, 2026, the conflict remains unresolved, with federal emergency interventions continuing to bypass state judicial orders [6].