TD Cowen's Washington Research Group analyst Jaret Seiberg assessed on May 27 that President Trump's Truth Social post backing the Commodity Futures Trading Commission (CFTC) as the sole federal regulator of prediction markets will have little practical effect on ongoing court cases. States retain a slight legal advantage in the dispute, the firm said, and no legislation clarifying the matter is expected to pass Congress this year.

Trump posted on Truth Social on May 26 that federal oversight of these platforms must be protected. "It is critically important that the CFTC's exclusive authority over Prediction Markets is maintained, and that they will thrive," he wrote, calling the sector a "new form of Financial Market." He added: "Under my leadership, we are setting 'rules of the road' that are the Gold Standard for the States."

The post drew immediate scrutiny given that Donald Trump Jr. serves as an adviser to both Polymarket and Kalshi, two of the largest CFTC-regulated prediction market platforms. Critics, including Common Dreams, have raised questions about whether the President has a personal financial interest in seeing federal jurisdiction over these platforms prevail.

Illinois Governor J.B. Pritzker pushed back quickly. "The most corrupt President in our nation's history wants to make sure states like ours can't regulate prediction markets," Pritzker said, reflecting the broader resistance from state governments that have filed lawsuits or passed restrictive legislation in this space.

The core legal question is a classification dispute: are contracts tied to sports or political outcomes regulated financial derivatives under the federal Commodity Exchange Act, or are they gambling products subject to state gaming licensing laws? Platforms like Kalshi and Polymarket operate as CFTC-registered Designated Contract Markets, giving them federal regulatory cover. Six states, specifically Illinois, Minnesota, New York, Rhode Island, Tennessee, and Louisiana, have issued cease-and-desist orders, enacted criminal penalties laws, or filed lawsuits arguing that federal registration does not override their authority over gambling. Among the most prominent state-level actions: Illinois issued cease-and-desist letters to prediction market platforms; Minnesota's criminal penalties law was signed by Governor Tim Walz; and New York's lawsuits were brought by Attorney General Letitia James.

On April 28, 38 state attorneys general filed an amicus brief at the Massachusetts Supreme Judicial Court opposing the CFTC's claim of exclusive jurisdiction. The CFTC filed its own amicus brief in the same proceeding, asserting that exclusive jurisdiction and signaling its role as an intervening non-party rather than a direct litigant.

There has been at least one notable win for the federal side. On April 6, 2026, the U.S. Court of Appeals for the Third Circuit became the first federal appellate court to hold that the Commodity Exchange Act preempts state gambling laws as applied to sports-related event contracts. The ruling affirmed an injunction blocking New Jersey from enforcing its gambling statutes against Kalshi. TD Cowen's Seiberg still gives states a slight overall edge, however, citing their long history as the primary regulators of sports gambling, a precedent that carries weight in courts.

CFTC Chair Michael Selig, currently the agency's sole sitting commissioner, has been direct about where this is heading. "We expect these matters to go to the Supreme Court," he said on May 6. TD Cowen expects the Ninth Circuit appeal in Crypto.com vs. Nevada, a case in which the digital asset exchange is challenging Nevada's attempt to apply state gambling law to its prediction market products, to stretch into 2027. Supreme Court arguments are forecast for late 2027, with a final ruling not expected before early 2028.

On-chain data shows how much is at stake commercially. Polymarket processed $10.57 billion in volume in March 2026, the first time it crossed the $10 billion monthly threshold. The platform logged roughly $26.2 billion in total volume across the first quarter of 2026, up more than 90 percent quarter over quarter. Volume eased to $10.3 billion in April 2026, marking the first monthly decline since August 2025 and a reminder that the sector's growth is not uninterrupted. The broader prediction markets sector surpassed $21 billion in monthly volume in early 2026, according to blockchain analytics firm TRM Labs. Active wallets interacting with Polymarket's protocol have more than tripled over the past six months.

The legal uncertainty in the United States is already shaping regulatory decisions elsewhere, with significant consequences for users outside North America. India's Ministry of Electronics and Information Technology issued a formal blocking order against Polymarket on May 21, cutting off access at the ISP level under the country's Promotion and Regulation of Online Gaming Act 2025, which classifies prediction markets as prohibited online money gaming.

India already applies a 30 percent flat tax on crypto gains and a 1 percent tax deducted at source on transactions, and the Polymarket block fits its broader posture toward speculative digital products. India counts tens of millions of crypto users overall; for those who had been active on Polymarket, the block represents an immediate hard barrier.

Spain and Indonesia announced similar restrictions, according to reporting published on May 26, adding to measures already in place in Brazil and Singapore.

For African markets, no country has issued a prediction market-specific ban. Polymarket and Kalshi remain accessible in Nigeria, Kenya, South Africa, and Ghana, though VPN usage provides a fallback in any jurisdiction that attempts ISP-level enforcement. The stakes for the region are real: Sub-Saharan Africa recorded $205 billion in on-chain transaction value between July 2024 and June 2025, a 52 percent year-on-year increase. Eight African nations have advanced crypto regulation frameworks in 2026, and growing developer activity on networks including Gnosis Chain signals that on-chain prediction market infrastructure is expanding on the continent. African central banks frequently cite U.S. regulatory frameworks when drafting their own rules.

If the Supreme Court ultimately sides with states and treats event contracts as gambling products, it validates the classification approach that India, Spain, and Indonesia have already adopted, giving other jurisdictions a ready-made template to follow. South Asian markets including Sri Lanka, Bangladesh, and Pakistan could be among the next to apply similar frameworks.

The CFTC completed a public comment period in May for an advance notice of proposed rulemaking on prediction markets. That rulemaking effort has been building since January 2026, when Chair Selig announced the initiative; the CFTC formally withdrew an earlier June 2024 proposed rule in February 2026 before publishing the advance notice in March 2026. TD Cowen sees no congressional action on prediction markets in 2026. Trump's post may accelerate CFTC rulemaking internally and could discourage some states from advancing new legislation, but it creates no legal precedent in pending cases. For developers and platforms building prediction market infrastructure anywhere in the world, two more years of regulatory ambiguity is now the baseline.