As online betting platforms rake in massive revenue over expectations for policies under President Donald Trump, conflict-of-interest concerns are mounting after it emerged that Donald Trump Jr., the president's eldest son, has been named an adviser to two major betting platforms.
On the 15th, the New York Times (NYT) reported, "The key figure at the intersection of the prediction market industry and the Trump camp is Donald Trump Jr.," adding, "He is an investor and unpaid adviser to Polymarket, the largest prediction market operator, while serving as a paid adviser to Kalshi."
Polymarket and Kalshi are platforms that allow users to bet in advance on the outcomes of specific public events. They drew attention by predicting the 2024 U.S. presidential election result with relative accuracy. While polls had forecast a razor-thin race between Democratic Vice President Kamala Harris and Republican candidate Donald Trump, the actual outcome was a landslide for Trump, as prediction markets had anticipated.
Recently, bets worth millions of dollars have been placed on domestic and foreign policy questions surrounding the Trump administration, including whether President Trump will seize Greenland, whom he will nominate as chair of the Federal Reserve, and whether the federal government will enter another shutdown. Earlier, the Financial Times (FT) in the United Kingdom reported that while monthly betting volume on prediction platforms was under $100 million (about 147.3 billion won) in 2024, it surged to $13 billion (about 19 trillion won) as of last November, signaling rapid growth in the prediction market.
The NYT highlighted a case in which an investor made a large profit through bets tied to information that only insiders would know. Earlier this month, an investor bet about $34,000 (about 50.08 million won) on the highly unlikely outcome that Venezuelan President Nicolás Maduro would lose power, and made $410,000 (about 600 million won) in revenue. The investor used a newly opened cryptocurrency account and concentrated most of the funds just hours before reports of Maduro's arrest emerged.
Kalshi said it bans betting by government officials and checks transactions by cross-referencing them with a database of "politically exposed people." Polymarket founder Shayne Coplan also stressed that the platform complies with all legal regulations.
The Commodity Futures Trading Commission (CFTC) is also mandated to police insider transactions in prediction markets, but experts say the laws are so vague that enforcement is virtually impossible. Timothy Massad, a former CFTC Chairperson, said, "It is very difficult for the platforms themselves to block this, and for the CFTC to prohibit it."
Tre Upshaw of Polysights, a startup that monitors Polymarket, said some betting patterns suggest bettors had inside information, noting that "several transactions on whether President Trump will pardon Changpeng Zhao, the billionaire founder of the cryptocurrency exchange Binance, also look suspicious." While no direct link to Trump Jr. has been confirmed, the suggestion is that bets were placed based on information from within the administration on platforms where he serves as an adviser.
In particular, the two prediction platforms have benefited from a relatively moderate posture by U.S. regulators. During the Joe Biden administration, the regulator, the Commodity Futures Trading Commission (CFTC), took a hard line by limiting the scope of prediction markets and forcing platforms to register with the Commission. But in February last year, the CFTC abruptly said it had "unduly constrained an important new frontier that harnesses the power of markets and now needs to take a step back," shifting its stance and easing related regulations.
The NYT reported, "The CFTC halted enforcement efforts against both Polymarket and Kalshi last year," adding, "This has raised questions about whether regulators may have been influenced simply by the fact that they knew of the president's son's interests." Meanwhile, Trump Media & Technology Group, controlled by the Trump family, has also announced the launch of its own prediction platform, "Truth Predict."