In early March, Donald Trump Jr. pitched to Republican state attorneys general at a New Orleans retreat, defending prediction markets against state regulation. Mr. Trump argued states were misled by gambling firms protecting monopolies, stating markets have robust federal oversight. His stance aligns with his father's administration, which has urged states to back off. Across the country, 20 states litigate whether prediction markets like Kalshi and Polymarket fall under state sports betting laws.

Last month, 44 states warned the platforms are a "new form of casino" preying on youth, estimating at least $2 billion in annual lost tax revenue. President Trump wants markets to thrive without state oversight. His administration argues the Commodity Futures Trading Commission is the sole regulator, suing nine states led by Democratic governors.

The CFTC's aggressive stance, invoking emergency powers, aligns with Trump family interests. Kalshi hired Donald Trump Jr. as an adviser last January for over $300,000 in shares; he also joined Polymarket's board via 1789 Capital. Traditional gambling firms, including those working with former New Jersey governor Chris Christie, oppose the markets as competitive threats.

Rob Schwartz, former CFTC general counsel, predicts the case will reach the Supreme Court. The litigation centers on whether the CFTC or state attorneys general should police these markets.