Donald Trump has thrown his full weight behind prediction markets, but here’s the thing: his enthusiastic backing could be the industry’s biggest liability. With Democrats favoured to retake the White House in 2028, any regulatory framework Trump builds now risks being dismantled within two years of a Democratic victory.

A President Blowing Hot and Cold

Trump’s support has been vocal and unequivocal on Truth Social, where he attacked Democratic leaders including New York Attorney General Letitia James and governors Tim Walz and JB Pritzker for taking action against prediction market expansion. Yet this enthusiasm masks genuine ambivalence. Just days before his full-throated endorsement, Trump admitted he didn’t like prediction markets “conceptually” and worried that the world had “become somewhat of a casino.”

The incident involving a US soldier arrested for wagering on Venezuelan politics appears to have sparked that concern. But Trump quickly softened his criticism, fearing the US might fall behind other nations developing the sector. It’s a pattern worth watching: principled opposition followed by pragmatic alignment.

The Political Dividing Line

What’s emerging is unmistakable. Republicans are now the industry’s champions, while Democrats treat prediction markets as unlicensed gambling requiring state-level regulation. The CFTC, under Trump’s appointee Michael Selig, has aggressively defended licensees against state regulators and pushed back Democratic attempts at restriction.

This shouldn’t surprise anyone watching US politics. Industries that become partisan wedge issues face genuine jeopardy when power switches hands. And Kalshi’s own prediction data tells the story: a 61% probability of Democratic victory in 2028.

The Family Money Trail

Trump Jr.’s involvement as a strategic advisor to Kalshi and investor in Polymarket through his 1789 Capital venture fund adds another layer of complexity. His enthusiasm stems partly from the platforms’ accuracy predicting Trump’s 2024 victory. But this family connection also provides ammunition for Democratic critics like Pritzker, who argues the administration is protecting markets to benefit connected interests.

Here’s the problem: the regulatory framework Trump is building right now, which he calls the “Gold Standard for the States,” could evaporate overnight under a Democratic administration committed to stricter oversight.

Global Context, Domestic Challenge

Most developed nations have already made their choice. Spain, Indonesia, Brazil, and over 30 other countries have banned or heavily restricted prediction markets, treating them as gambling. The US path toward light-touch CFTC regulation is genuinely exceptional. That exceptionalism depends entirely on who’s running the show.

Congressional attempts at restriction, including bipartisan efforts like the “Prediction Markets are Gambling Act,” suggest this remains unsettled terrain politically. Trump won’t sign restrictive legislation, but his successor might enthusiastically embrace it.

The Timing Question

The prediction markets industry has roughly two years to solidify its position before the 2028 election potentially reshapes everything. That’s both opportunity and warning. Trump’s support is genuine, but it’s also conditional on Republican control of the executive branch. In US politics, that’s never guaranteed, and in this case, the odds aren’t even favourable.

What the team thinks

Sheena McAllister says:

While Carl Mitchell raises valid concerns about regulatory volatility driven by political cycles, his analysis overlooks the structural foundations that prediction markets could establish during this window, much like how UKGC licensing frameworks have proven resilient across changing administrations by embedding consumer protections and operational standards into the fabric of regulation rather than tying them solely to political goodwill. The real risk isn’t a two-year timeline for dismantling, but whether the Trump administration will prioritise durable, principles-based regulation that safeguards market integrity and problem gambling prevention, ensuring that any successor government inherits sensible guardrails rather than a permissive free-for-all that breeds the sort of backlash that typically triggers crackdowns. From a compliance perspective, prediction markets should be lobbying now for bipartisan consensus on core protections, not betting their future on executive favour alone.