White House’s Support of Prediction Markets May Be Cooling

It seems that public opposition may be jeopardizing the prediction industry’s support from the White House.

President Trump has faced mounting questions about insider trading involving prediction markets. While Commodity Futures Trading Commission chairman Michael Selig has been desperately trying to ease fears over the issue, he has failed to provide clarity on how the CFTC will actually tackle it.

The CFTC’s failure to draw clear lines around insider trading has the public questioning major world events and the last-minute market activity before they happen. Another instance of this occurred this week, after allegations surfaced against a US soldier who bet on the removal of Venezuela’s President shortly before taking part in the operation to do so.

When asked about the incident, the President offered a stunning statement.

“The whole world, unfortunately, has become somewhat of a casino,” the President told reporters. “You look at what’s going on all over the world in Europe and every place they’re doing these betting things -- I was never much in favor of it. I don’t like it conceptually, but it is what it is. I’m not happy with any of that stuff. They have all these different sites. They have predictive markets. It’s a crazy world.”

The prediction industry made itself a liability 

Starting with Kalshi, the prediction industry has been loud and brash as it has grown. They used aggressive rhetoric against the states and made grandiose claims about the industry’s importance to the US economy. However, this tactic didn’t land well with many Americans, who weren’t fooled by the industry’s claims that it wasn’t offering a form of gambling.

According to a recent poll, around 65% of Americans believe the prediction industry should be subject to state gambling laws. This would force the industry to compete directly with online sportsbooks, following the same regulations and tax rates. While they would still be able to offer prediction markets, operators would find it hard to steal customers from traditional sportsbooks.

With fears over losing Congress in November’s midterm elections growing, it seems the industry may have become too big a political liability.