A former Trump administration financial regulator is publicly supporting the utilize of prediction markets, even as several states challenge their legality. James Newsome, who served as chairman of the Commodity Futures Trading Commission (CFTC) under President Trump, has voiced support for platforms allowing users to bet on the outcomes of future events, according to a report by Politico.
Newsome’s backing comes as prediction markets face increasing scrutiny from state regulators. The core of the dispute centers on whether these markets should be classified as gambling operations, subject to state-level restrictions, or as legitimate tools for forecasting and information aggregation. Kalshi, a CFTC-regulated exchange, and Polymarket, an offshore platform, have been at the forefront of this debate. A new competitor, Novig, recently raised $75 million in funding, signaling growing investor confidence in the sector despite the legal challenges, according to Fortune.
The debate extends beyond the regulatory classification of these markets. Some argue that, despite potential risks, prediction markets can offer valuable insights into future events, even those traditionally considered difficult to forecast. Seeking Alpha reported on the use of prediction markets to gauge expectations for Bitcoin’s price, for example, with markets suggesting a return above $100,000 is anticipated, though the timing remains uncertain.
The legal challenges aren’t limited to cryptocurrency. Federal News Network reported on prediction markets assessing the likelihood of personnel changes within the Trump administration, specifically focusing on former Attorney General Pam Bondi following a congressional hearing related to the Epstein case. This illustrates the breadth of events on which these markets operate.
While concerns about potential misuse, including the possibility of insider trading, exist – as highlighted by The Economist’s recent analysis of the topic – proponents argue that the benefits of accurate forecasting outweigh the risks. The CFTC, under Newsome’s leadership, previously approved Kalshi’s application to offer contracts on the outcome of elections, a move that further fueled the debate over the role of prediction markets in the political sphere.
As of February 19, 2026, the legal status of prediction markets remains contested, with several states continuing to push for stricter regulation. The CFTC has not issued a further statement regarding Newsome’s recent comments or a revised regulatory framework.
