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Donald Trump has put prediction markets alongside artificial intelligence and crypto as technologies in which he wants the United States to lead.
The timing is significant.
The biggest U.S. prediction-market platforms are increasingly dominated by contracts tied to sporting events. That has put them directly into a fight with state gambling regulators, who argue that these products amount to sports betting without the licences required to operate in their jurisdictions.
Trump did not mention sports betting in his White House remarks on August 19. But the business built around prediction markets makes the distinction harder to ignore.
Platforms such as Kalshi and Polymarket allow users to trade contracts on events ranging from elections and politics to weather and entertainment. Their sports products have become a major part of that business. The Kennedy Forum estimates that sports-event contracts have represented about 75% to 90% of Kalshi’s trading volume and roughly half of Polymarket’s activity.
That puts a large part of the prediction-market boom much closer to conventional gambling than the technology label might suggest.
A Regulatory Fight With Much Bigger Stakes
The platforms operate under federal oversight from the Commodity Futures Trading Commission, a framework that has helped prediction markets expand nationally.
State regulators see the issue differently when the underlying event is a basketball game, football match or other sporting contest.
Several states have challenged sports-event contracts as unlicensed gambling. The dispute has already moved beyond the United States. Brazil and Spain have taken action against Kalshi and Polymarket, while regulators or authorities in countries including France, Australia, Colombia, Portugal and Singapore have restricted or blocked Polymarket over gambling-related concerns.
That creates an awkward problem for any ambition to make American prediction markets a global industry.
The companies are not small experimental ventures anymore. Kalshi has reportedly been valued at around $40 billion in recent investment discussions, while Polymarket has been valued at about $20 billion. Those figures put both above some of the biggest established U.S. sports betting brands.
And the traditional betting industry is moving in the same direction. DraftKings, FanDuel, Fanatics and Underdog have all entered the prediction-market space, further blurring the line between a financial-style contract and a sports wager.
The distinction matters because gambling risk does not disappear when the product is packaged as a market.
The Gambling Question
Sports betting has become a large American business, but the financial cost to players is substantial. State-licensed, house-banked sportsbooks took in nearly $17 billion from Americans in 2025.
That figure does not include the wider collection of products now competing for the same customers, including prediction markets, sweepstakes sportsbooks, daily fantasy platforms and offshore betting sites.
Research cited by the National Council on Problem Gambling has found particularly troubling indicators among sports bettors. One study found that 16% met clinical criteria for gambling disorder, while another 13% displayed signs of gambling problems. A survey conducted in early 2026 found that 60% of U.S. online sports bettors reported chasing losses, a behaviour closely associated with problematic gambling.
The prediction-market expansion therefore arrives at a sensitive point for the gambling industry.
At the beginning of Trump’s first term, legal online sports betting outside Nevada was not available in the United States. Less than a decade later, sports wagering is one of the main forces behind a new market that Washington is now presenting as part of America’s technological leadership.
That shift has happened remarkably quickly.
Trump’s endorsement of prediction markets does not settle the legal battle between federal regulators, states and the companies themselves. Nor does it establish how sports contracts should ultimately be classified.
But it does signal that the administration sees the sector as strategically important.
For prediction-market companies, that could mean a much more powerful political tailwind. For states trying to control sports gambling within their borders, it could make an already complicated fight considerably harder.
Source: gamblingharm.org
