Polymarket authorized for U.S. return just days after Donald Trump Jr. joins as adviser

By Gordon Gottsegen

Federal regulators are lowering hurdles for prediction markets at the same time the president's son is backing them

Donald Trump Jr., son of the U.S. president, plays an advisory role at several companies, including two rival prediction markets.

In 2024 the betting markets showed Donald Trump as the likelier candidate to win the U.S. presidential election while the polls were still reflecting a toss-up race. Ever since that prediction came true, Trump's son, Donald Trump Jr., has been betting on the success of those markets.

Last week, Trump Jr.'s venture-capital firm, 1789 Capital, announced a strategic investment in Polymarket, the world's biggest prediction market. As part of the investment in the private company, Trump Jr. is joining Polymarket as a strategic adviser. Terms of the investment were not disclosed.

On Wednesday, the Commodity Futures Trading Commission - the federal government entity that regulates prediction markets - issued a letter of no action allowing Polymarket to relaunch its services in the U.S.

"Polymarket has been given the green light to go live in the USA by the @CFTC," Shayne Coplan, Polymarket's founder, said in a social-media post on Wednesday.

Polymarket is a platform on which people can wager crypto on the outcome of future events, ranging from the Fed's interest-rate decisions to sports championships to Taylor Swift prospectively becoming pregnant. Polymarket is popular internationally, but in 2022 the CFTC prohibited the platform from serving U.S.-based customers.

Polymarket has not been operating in the U.S., according to its terms of service. But outside the U.S. users had made $6 billion in predictions in the first half of 2025, the company said. Wall Street views prediction markets as a lucrative opportunity. Billionaire Thomas Peterffy, the founder of Interactive Brokers Group, has forecast that prediction markets will be bigger than the stock market within 15 years.

The U.S. government's legal and regulatory scrutiny of Polymarket appears to have softened in 2025. Caroline Pham, the CFTC's acting chair, said earlier this year that "prediction markets are an important new frontier" and that the regulator "must break with its past hostility." Now that Donald Trump Jr. is a Polymarket investor and adviser, he could potentially benefit from the Trump administration's regulatory posture as Polymarket moves to return to the U.S.

"It's reasonable to think that Donald Trump Jr. will have [an] open line of communication with his father," Jeff Hauser, executive director of government watchdog group Revolving Door Project, told MarketWatch. "You would imagine the adult children of politicians are expected to have their own careers, but some careers are on the frontier of regulation and public policy."

'The CFTC could make Polymarket obsolete, or it can make it a viable business - that's the range of policy outcomes on offer.'Jeff Hauser, Open Door Project

Hauser, who scrutinizes appointments by the executive branch, said policy changes can have a capacity to make or break certain industries, especially if, like prediction markets, those industries are new and highly regulated. "The CFTC could make Polymarket obsolete, or it can make it a viable business - that's the range of policy outcomes on offer," Hauser said.

Donald Trump Jr. has publicly praised prediction markets. On social media, he touted prediction markets as a source of truth when compared to what he, like his father, President Donald Trump, has called the "fake news media." He has pointed to the fact that his father pulled ahead last year in the election-related prediction markets before Election Day.

Polymarket is not the only prediction market Trump Jr. is backing. In January, Kalshi announced that Trump Jr. had become an adviser to the company. Kalshi is a prediction market that currently operates in the U.S.

A month after Trump Jr. joined Kalshi as an adviser, President Trump nominated Brian Quintenz to become chair of the CFTC. Quintenz is a former CFTC commissioner. He's also on the board of directors of Kalshi, setting up a potential conflict of interest. In a Senate hearing, Quintenz took a permissive stance when it came to the expansion of prediction markets. Quintenz has said he would step down from the Kalshi board if confirmed. Since then, his nomination has been paused, and he remains on the board of Kalshi.

In a statement to MarketWatch, a spokesperson for the Trump Jr. venture-capital firm that made the investment in Polymarket said the firm takes minority stakes in private, American companies. 1789 Capital "has gone above and beyond competing firms founded by, or staffed with, prominent Democrat politicians in order to maximize transparency and compliance," the 1789 Capital spokesperson contended. "Don, as a private citizen who has never served in government, is continuing to pursue his proven, decades-long career in business and follows all of the same laws and guidelines as any other strategic advisor to any other company."

Kalshi declined to comment but confirmed last week that Trump Jr. remains a company adviser even as he now also advises its primary competitor. Trump Jr., the Trump Organization and Polymarket did not respond to MarketWatch's requests for comment.

Polymarket's eroding regulatory hurdles

The regulatory landscape around prediction markets in the U.S. has shifted since Trump's second election to the White House, and Polymarket aims to become a viable business in the U.S. market.

Polymarket launched in 2020. In 2022 the CFTC determined that its platform was operating as an unregulated exchange and asked the company to cease U.S. operations. Polymarket agreed to the CFTC's terms and paid a $1.4 million fine, which the CFTC said was a reduced penalty due to "Polymarket's substantial cooperation." Polymarket neither admitted nor denied wrongdoing.

"All derivatives markets must operate within the bounds of the law regardless of the technology used, and particularly including those in the so-called decentralized finance or 'DeFi' space," CFTC acting director of enforcement Vincent McGonagle said at the time.

Polymarket grew as a platform outside the country, particularly leading up to the U.S. presidential election. The platform saw a handful of million-dollar bets that began to skew the odds in the favor of Donald Trump's winning the election. As Polymarket received more public attention, the Federal Bureau of Investigation opened an investigation into whether the platform was allowing U.S. users on its platform, which eventually led to an FBI raid and seizure of Polymarket founder Shayne Coplan's phone. In a social-media post, Coplan said the FBI raid and investigation had been part of a Biden administration effort to go after companies associated with political opponents, and Polymarket said at the time that it's a fully transparent prediction market.

From the archives (November 2024): Here's why the FBI seized Polymarket founder's phone

The pressure from federal agencies appeared to diminish in 2025 after the advent of a second Trump administration. In July the FBI publicly dropped its investigation of Polymarket. The Department of Justice and U.S. attorney's office in Manhattan did not respond to requests for comment as to why the investigation was terminated.

Days after the investigation was dropped, Polymarket announced its acquisition of QCEX, a company that operates a clearinghouse and a CFTC-registered derivatives exchange called QCX. This acquisition opened a path for Polymarket to resume U.S. operations through the QCX exchange. QCX first submitted paperwork to register with the CFTC in 2022, according to a CFTC filing. The exchange received CFTC approval in July. The CFTC's no-action letter issued on Wednesday authorized QCX to operate as a betting market in the U.S.

Dennis Kelleher, who as president of investor advocacy group Better Markets has been critical of betting markets, said in July that this seemed like a backdoor approach to becoming a regulated exchange. In a letter to the CFTC, he questioned the timing of these developments.

"The timeline here tells an interesting story," Kelleher wrote. "Polymarket had been under investigation by both the CFTC and the Department of Justice for potentially violating its 2022 settlement with the CFTC, which prohibited it from offering binary options to U.S. users. That investigation was reportedly serious enough for the FBI to raid the home of Polymarket's CEO and seize his phone and electronics. Yet in mid-July, after a change in [presidential] administration, both agencies closed their investigations."

Kelleher emphasized in his letter that QCEX's application to become a CFTC-registered exchange had been dormant for years, but it secured approval in July, the same month that the FBI investigation into Polymarket was dropped and the acquisition was announced.

The CFTC's website, under Trump, shows that it has stepped up approvals of designated contract markets and given the green light to four new exchanges including QCX, which took the longest.

Trump's advisory role at Polymarket and 1789 Capital's investment were announced after the legal and regulatory scrutiny of Polymarket began to subside. Axios reported that talks between 1789 Capital and Polymarket began around 18 months ago. Trump Jr.'s advisory role with Kalshi started at the beginning of 2025, before his father returned to the White House after defeating Democratic Vice President Kamala Harris in November 2024, and before the investigation into Polymarket was dropped.

"Polymarket is the largest prediction market in the world, and the U.S. needs access to this important platform," Donald Trump Jr. said in a statement when his role at the company was announced. "I look forward to working with the team to advance its mission of bringing truth and transparency to everyone - including the U.S."

-Gordon Gottsegen

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09-03-25 1450ET