The future looks scary as Trump gives prediction markets free rein

It is a good, good, good time to be a prediction market.

While companies like Kalshi and Polymarket spent the beginning of the decade subject to pesky regulations under a Democratic president, these days they’re the recipients of incredible largesse from the Trump administration.

It’s a pretty sweet deal to have a federal government hellbent on helping you push your insider trading/gambling juggernaut into every state—even those with laws explicitly banning it. But that’s exactly what the Commodity Futures Trading Commission has been doing. 

So why shouldn’t Kalshi go for broke, right?

It isn’t enough to functionally override state laws, turning every corner of the country into an unregulated gambling nightmare—federalism be damned. Now, Kalshi is pushing to allow margin trading too. 

“Margin trading” might sound either benign or incomprehensible if you’re not a richie rich investor type, but in this context, it means that Kalshi is asking the government to allow people to gamble on its platforms using money that they do not have. 

What could possibly go wrong?

Well, let’s start with the fact that what goes on in polymarkets is in no way “trading.” The CFTC is helping prediction markets prop up the laughable lie that they’re actually just like commodities or futures markets, where farmers hedge their potential losses in corn crops or whatever. 

But no actual traders would ever participate in a market where unprofitable users outnumber profitable ones by almost 3 to 1, as they do at Kalshi. Polymarket, Kalshi’s largest rival, reports that only 2% of “traders” have ever made more than $1,000, and only 0.033% have topped $100,000.

Yeah, it’s tough to make money honestly on the corrupt insider-trading jamboree because you’re betting against the actual insiders. But thanks to the platform’s anonymity, you don’t know it.

So it’s gambling, but it’s gambling with the worst possible odds. Definitely a situation that will be made better if you let people gamble with money that they don’t have.

Because that’s what margin trading is: you put up less than the cost of the full trade, giving you leverage to trade more. Sure you can win big, but there’s also that part where you can lose big. And with prediction markets, the entire enterprise is already tilted against most of the participants, so this will only make it worse.

Kalshi has a pretty big ace in the hole in Donald Trump Jr., who is on the payroll as an adviser. 

Fun fact: Junior got his Kalshi stake for free as part of his role as adviser, so all of his grift from this is pure profit, baby. He even got deployed to tell red-state attorneys general to back off on regulating prediction markets—or else. 

And it’s not just Kalshi. Trump Jr. is also on the board at Polymarket, which asked the CFTC to let them margin trade back in July, though they don’t have an answer yet.

There’s no real reason to pretend that the CFTC is going to regulate one of the Trump family’s favorite things—did I mention they’re kicking around opening their own prediction market? 

You can expect this wild world to get much, much wilder and much, much worse.

We’ll get straight to the point: The financial hardships that Daily Kos is facing this year are tough.

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