The explosive growth in popularity of prediction platforms for 2025 and 2026, such as Polymarket and Kalshi, has taken on an unexpected political tinge. US President Donald Trump has for the first time publicly criticized these markets, noting that the world has turned into a “casino,” although his son Donald Trump Jr. holds an advisory role in both of these platforms. Against this background, several US states at once took a tough stance, accusing a number of major cryptocurrency companies of illegal activities regarding betting, writes RBC.
The Department of Justice of Wisconsin on Thursday, April 24, filed three separate lawsuits, calling the activities of Polymarket, Kalshi, broker Robinhood, crypto exchanges Coinbase and Crypto.com illegal. According to the prosecution, the companies offered contracts to state residents on the outcomes of sporting events. Prosecutors insist that the mechanics of betting are not different from traditional betting services.
The legal crackdown on prediction markets isn’t just heating up in one state. On Tuesday, New York Attorney General Letitia James filed a lawsuit against Coinbase and Gemini. The claims include $2.2 billion from Coinbase and $1.2 billion from Gemini. Authorities believe the companies operate an illegal gambling business by allowing users to place bets.
Tennessee and Arizona are directly suing Kalshi. Arizona, Connecticut and Illinois have issued injunctions to stop its operations in the jurisdiction. And the governors of New York and Illinois this week signed executive orders prohibiting state employees from using insider information for betting.
All of this comes amid a slew of suspicious transactions on the platform, where anonymous participants are accurately placing bets, earning hundreds of thousands of dollars. One such story includes the indictment of a US Special Forces soldier involved in the operation to capture Venezuelan President Nicolas Maduro. He was accused of using classified information to make money on bets.
Users of prediction markets place bets on the outcome of events by buying “yes” or “no” tokens. The market price of a token reflects a collective assessment of probability: for example, $0.20 means a 20 percent chance of an event occurring. Winning tokens bring $1 each, while losing tokens are zeroed out. These tokens can be traded within the platforms themselves, like on an exchange, until the outcome occurs.
The Polymarket platform soared in popularity during the U.S. presidential campaign in 2024, when the volume of trades in predicting the outcome of the election exceeded $3 billion. Polymarket’s probability assessment is increasingly recognized outside the crypto market and in popular culture.
Despite these challenges, prediction platforms have remained one of the most lucrative niches of the crypto market in recent months. The sector’s largest blockchain project, Polymarket, is among only a handful of cryptocurrency companies that generate around $1 million in daily revenue (since the beginning of April, the cumulative total has exceeded $21 million).
For comparison, the world’s largest decentralized exchange by trading volume, Uniswap, has not even gained $3 million in the same time.
World casino
Around the same time that the lawsuits against cryptocurrency companies in Wisconsin became known, journalists in the Oval Office asked US President Donald Trump to comment on the situation around prediction platforms.
“You know, the whole world, unfortunately, has become like a casino. You look at what’s going on all over the world, in Europe, everywhere they’re doing these bets. I’ve never been thrilled about it,” Trump stated.
The US President added that he is not happy with what is happening and admitted that “the world has become much crazier than it used to be.” Notably, Trump himself owned a casino empire in Atlantic City back in the 1980s, which later went bankrupt.
Adding further irony is the fact that the president’s son Donald Trump Jr. is an advisor to both Polymarket and Kalshi. And he has previously promoted the idea that these platforms are ahead of traditional sources of information in predicting the outcome of real-world events like elections. Though it has also been stated that Trump’s son does not trade in these markets or interact with the federal government on behalf of the companies.
When speculating on why prediction markets are attracting such interest from the crypto community, many industry experts point to the excitement of crypto traders. And prediction markets provide the very speculative component and thrill – it’s a “dopamine loop” with a simple version of events.
