The House Always Wins
Original image courtesy of Vivian Zar Ni
From the high rollers to the everyman, practically anyone who has placed a bet has heard of gambling’s proverbial truth: “the house always wins.” No matter how large the success of one lucky player, in the long run, the casino comes out on top. To be an exception to the rule is to be lucky, to hit big, which creates some appearance of fairness across bettors. But with mysterious, $400,000 profits on bets predicting the capture of world leaders and $150,000 scores forecasting military strikes with classified intelligence, in the case of prediction markets, the winners seem to be more than just lucky, and the house rules, deeply unfair .
Still in their infancy, prediction markets have experienced a meteoric rise. Two leaders have turned the industry into an effective duopoly; Kalshi, along with its rival app, Polymarket, regularly handle 80 percent of prediction-market trading volume, with estimates suggesting the two companies make up almost 99 percent of the market. With such rapid growth, the need for regulatory guardrails is equally large. As lawyers and lobbyists alike duke out the details, the question the industry faces is one of authority: who gets to make the rules?
To answer that question, the prediction-market industry has needed to define itself. Despite offering users up-to-chance choices such as ‘2028 U.S. Presidential Election winner’ or ‘Masters Tournament Winner,’ both platforms insist they are not gambling services. Though users evaluate odds and wager money for the chance of a payout, with advertisements featuring catchphrases like “live bets” or “bet on football legally,” Kalshi CEO Tarek Mansour insists, “we don’t think it’s gambling[...] we just don’t.”
Mansour and other industry leaders make these claims so their companies do not have to answer to ‘house rules’ that govern many other forms of online gambling, especially sports gambling at the state level. Eleven states have outright bans on sports gambling, with many more enforcing a plethora of regulations and taxes on it. Meanwhile, Kalshi and Polymarket remain fully available in every part of the country. In escaping the regulatory hex of registering as a gambling platform, prediction markets have been forced to embrace blatant and absurd presentations of their bets. On Kalshi, for instance, I cannot participate in sports gambling by putting money on the Lakers to beat the Clippers. I am not yet 21, and the State of New York strictly prohibits me from sports betting while I am within state lines. I can, however, choose either ‘Yes’ or ‘No’ on a prediction for “Los Angeles (L)” or “Los Angeles (C)” when they play a “professional basketball game,” which is allowed in all 50 states for adults over 18.
Instead of offering a “gambling product,” prediction markets have devised a legal-speak workaround. They offer “a platform where people can bet on the outcome of future events, by buying and selling shares in the outcomes.” These are not bets but “event contracts,” a form of financial derivative that is federally regulated by the Commodity Futures Trading Commission (CFTC).
However, these days, ‘regulated’ usually means its antonym, with the White House boasting the “Best Deregulation Year in History” last December, and ‘federal authority’ often means the will of President Donald Trump. Regarding prediction markets, the commander-in-chief is waging an antri-regulation war on many fronts. In the courts, the administration scrapped a Biden-era proposal to ban these markets and dropped investigations into leading firms. In the court of public opinion, the Trump-appointed head of the CFTC, Michael Selig, has embarked on an op-ed crusade, penning articles in both the Washington Post and the Wall Street Journal within a month of each other that attacked states’ attempts to regulate prediction market platforms.
Naturally, with no check on how betting is done or what is being bet on, the industry has been stacking its chips. Exponentially so. Bets across all categories exploded in the first year of Trump’s term, with standouts like the Economics category growing 905 percent, Tech & Science rising 1637 percent, and Politics outpacing Sports—a powerhouse of the gambling industry—by 400 percent on Kalshi and Polymarket. The White House’s simultaneous grab of regulatory authority and release of regulatory action has left massive amounts of trades to be conducted on countless scenarios. It seems almost inevitable, then, that cases of suspicious trades—like the anonymous user who made over $1 million in a day with ‘dumb luck’—are on the rise.
A broad position of anti-regulation very well may be the sole wind propelling the sails of the Trump prediction market agenda onward, but the interests that lie within the family dynasty run deeper. Enter Donald Trump Jr.
Though he shares his father’s name, Donald Trump Jr.’s spokesman claims they share very little by way of conflicts of interests. Trump Jr.’s PR team has responded to such suggestions by stating that that “the only conflict of interest” relating to Trump Jr.’s personal business ventures is “between the network of left-wing activists and their ideological allies in the media who keep using lies and baseless innuendo to smear Don.”
The “smear campaign” referenced by the spokesman refers to questions surrounding Trump Jr.’s sizable financial positions in industries directly regulated by his father’s administration, including prediction markets. In January, Kalshi, one of two industry leaders, welcomed Trump Jr. to serve as a strategic advisor, effectively hiring him into a paid position. A few months later, a fund founded and controlled by him, 1789 Capital, invested a large position in Polymarket, Kalshi’s sole competitor in the prediction market game. Polymarket followed suit with its bitter rival and welcomed Trump Jr. to sit on its advisory board as well, enthused about the “decades of experience in forward-thinking business innovation and strategic perspective” he brings. Regarding the simultaneity of the roles, a spokesperson for Trump Jr. assured investors and the general public alike: “This doesn’t change anything regarding Don’s role with Kalshi. Don[...] couldn’t be more excited about his new role with Polymarket.”
Beyond his relationship with the giants of the prediction market industry, Trump Jr. has committed to his support of the sector by launching “Truth Predict,” yet another prediction market platform, through the Trump Media & Technology Group Corporation, of which he is a Director and board member. The results of his savvy thus far are undeniable. In 2025 alone, Trump Jr.’s personal fortune grew from an estimated $50 million to $500 million, in large part due to the investments made by 1789 Capital. Trump Jr. claims that he is a businessman like any other, having never worked in government in his life, and providing for his five children. The obvious difference is that most businessmen do not have fathers running the White House; the administrations of said fathers are not actively battling to retain control over the industries that their businessman sons invest in in the face of bipartisan calls for regulation.
In all fairness to Trump Jr., his actions are not quite as exceptional as they may seem. He and his father join a lineage of sitting Presidents supporting the industries of their son’s businesses—the Bush children and, more recently, Hunter Biden have been accused of exploiting their speed-dial access to the White House.
Moreover, Trump Jr. is not the sole puppeteer of a highly coordinated scheme; he represents what happens when oversight ignores an industry. The overlapping interests, anonymous wagers with implausible accuracy, and ethical questions raised by betting on death all create an industry that is simply out of control. These are not bugs in the regulatory system; they are its design.
But without guardrails, there is no way to know if the Trump administration is operating unethically or to hold them accountable for it. The United States does have a robust legal approach to preventing manipulation, fraud, and insider trading, which could help rein in prediction markets. The problem is, the dominant legal framework that exists—with specific language and decades of case law—applies only to securities through the regulation of the Securities and Exchange Commission (SEC). Specifically, 15 U.S.C. §78j and Rule 10b-5 have long been used to prohibit fraud and insider trading for securities, such as stocks, bonds, and options. But prediction markets are not classified as securities; they claim to be commodities—tangible items traded in commerce. They are, legally speaking, “derivative commodities,” which are financial contracts used to speculate on price changes.
That distinction places them under the purview of the CFTC, which operates under the Commodity Exchange Act, bringing with it an entirely new legal framework. The Commodity Exchange Act, unlike the Securities Exchange Act, was never meant to handle insider trading. In instances where the CFTC has attempted to enforce insider trading penalties, it had to rely on fraud charges or much narrower rules, which are incomprehensive. It is in this legal minutiae, this confusing, definitional grey area, that the entire prediction market industry thrives. In the darkness, it avoids both the careful inspection of the SEC’s regulation and the harsh light of state anti-gambling laws.
And the industry’s leaders are aware of the multi-billion dollar crevice they have created for themselves. The Coalition for Prediction Markets, an industry group representing Kalshi, Crypto.com, and other prediction market operators, said in a statement, “The CFTC has regulated these markets for decades, and they are best equipped to ensure market integrity.” As a consequence, profit margins grow, language regarding insider trading remains undefined and structureless, and mystery accounts continue to cash out six-figure-plus checks based on questionably lucky predictions.
When the lines between the White House and the casino house start to blur, nothing is really up to chance.
Lukas Roybal (CC ‘27) is a columnist from Los Angeles, CA, studying Political Science, Philosophy, and Film. He is interested in American law, particularly antitrust, criminal justice, and the First Amendment.