Gaming regulators nationwide may soon contend with a new derivatives prediction market with connections to the White House.

Representatives of the Trump Media and Technology Group Corp. last week announced plans to roll out Truth Predict, a collaboration with crypto.com linking the social media platform Truth Social to a new prediction market.

Gaming regulators nationwide have criticized prediction markets as illegal sports gambling platforms because they sell contracts that are similar to sports wagers with participants taking a side in a yes-or-no proposition about the outcome of a game.

Regulators in several states, including Nevada, say offering those contracts amounts to providing illegal sports bets because the companies are not licensed in the states in which they operate.

Existing prediction markets contend that they aren’t required to be licensed because they are regulated and overseen by the federal Commodity Futures Trading Commission. They say they can operate in every state, even those that don’t offer sports betting, such as in California and Utah.

The Nevada Gaming Control Board in March issued a cease-and-desist demand to KalshiEx LLC for offering contracts in Nevada and the company responded by filing a lawsuit in U.S. District Court in Nevada against the board and its individual members.

Court case to begin soon

The Nevada Resort Association joined the state’s defense in order to protect the interests of its 72 members to offer legal sports bets.

The court case is expected to begin by the end of the year.

Representatives of the Control Board and the Resort Association say they can’t comment on the court case or on the rollout of Truth Predict because they are involved in the case and former Control Board Chairwoman Becky Harris, now a distinguished fellow in gaming and leadership for UNLV’s Office of Economic Development, has been called as an expert witness in the case and wouldn’t comment.

Joe Asher, owner of the new Las Vegas-based Boomer’s Sportsbook and a critic of prediction markets’ attempted entry into sports betting, said he had heard the reports about the launch of Truth Predict and isn’t surprised since President Donald Trump’s son, Donald Jr., is an adviser to Kalshi and President Trump is an active participant on Truth Social.

“It’s broadly the same story around prediction markets,” Asher said. “It’s clear that the CFTC isn’t going to clamp down on this stuff.”

New CFTC chair nominated

In fact, Trump recently nominated Mike Selig, a high-ranking cryptocurrency regulator, to be the commission’s next chairman. The White House pulled the nomination of Brian Quintenz, a Kalshi board member, who was criticized by lawmakers in an August confirmation hearing.

Rep. Dina Titus, D-Nev., in August wrote a letter to acting CFTC Chairwoman Caroline Pham questioning Quintenz’s ability to avoid potential conflicts of interest.

In addition to offering prediction contracts on sports outcomes, Truth Predict promises to offer contracts on election results and already has posted a proposition on the outcome of the New York City mayoral election where Democratic nominee Zohran Mamdani is considered the favorite over former New York Gov. Andrew Cuomo, running as an independent, and Republican nominee Curtis Sliwa.

The Nevada Constitution bans wagering on election outcomes.

Asher, who said he once bet on Joe Biden to win the 2020 election in Great Britain where wagering on elections is legal, said he expects the legal fight between the states and the prediction markets will be lengthy.

“The legal proceedings inherently drag on,” Asher said. “You get smart lawyers engaged in the case and they’ll come up with all kinds of arguments. I continue to believe that sports betting is not something that is permitted under the CFTC rubric. It’s not within the Commodities Exchange Act and gambling is something that’s regulated by the states, sports betting in particular. What was the point of the PASPA (Professional and Amateur Sports Protection Act) litigation (which enabled U.S. states to offer sports betting) if this was legal all along and nobody knew it?”

Commodity exchanges have been criticized for not having responsible gaming programs, having no controls on the age of participants and no geofencing to limit from where contracts can be implemented.

Could reach Supreme Court

Crypto.com is another futures exchange that has had mixed success operating in states that have legalized sports betting. While some federal courts have sided with states, others have backed the markets. Experts say it could take a U.S. Supreme Court decision to reach a final outcome on the issue.

“Prediction markets are poised to be a multi-deca-billion-dollar industry,” Kris Marszalek, co-founder and CEO of crypto.com, said in a release announcing the unveiling of Truth Predict. “Crypto.com has quickly become one of the most trusted providers of prediction market services and we’re thrilled to combine with Truth Social to support the world’s first prediction markets available from a social media platform.”

According to the release, Truth Social users will be able to trade prediction contracts related to major events and milestones, such as political elections, interest and inflation rate changes, commodity prices on gold and crude oil, events across all major sports leagues and more using the new product technology. Prices will update in real-time, allowing users to react instantly to developments in major current events.

“We are thrilled to become the world’s first publicly traded social media platform to offer our users access to prediction markets,” Devin Nunes, chairman and CEO of Trump Media, said in a release. “Truth Predict will allow our loyal users to engage in prediction markets with a trusted network while harnessing our social media platform to provide totally unique ways for users to discuss and compare their predictions.”

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