Prediction Markets Face Trump Backlash Risk as Midterm Odds Favor Democrats Heavily
Prediction markets backed by Trump Jr. now give Democrats over 70% odds to control Congress, up sharply from recent months. This risks provoking the president's known fury at unfavorable projections while the sector depends on favorable CFTC safe harbor under Trump appointee Selig. Midterm results could shift both political and regulatory dynamics.
SCCG Take — Prediction market operators must weigh political optics closely; regulatory protections remain contingent on sustained administration tolerance amid volatile election forecasts.
Prediction market platforms backed by Donald Trump Jr. are flashing dire outlooks for Republicans ahead of the midterms, with Kalshi showing Democrats holding a higher than 70% chance of winning control of both the House and Senate. That figure has climbed from below 40% four months earlier. The shift places Kalshi and Polymarket in an awkward spot with the president, whose hatred of unfavorable election projections runs deep enough to trigger lawsuits.
Trump previously praised these markets when they favored him before the 2024 election as superior to "fake polls." Now the same mechanisms forecast losses that could test his tolerance. According to a Sportico report, the sector needs Trump's support amid what Kalshi CEO Tarek Mansour has called a "brutal, bloody war" against states and tribal groups seeking to regulate and tax it like gambling rather than a financial asset class.
Regulatory Favor Tied to White House Alignment
The CFTC under Trump-appointed chairman Michael Selig has provided safe harbor from state gambling laws and actively supported Kalshi and Polymarket in litigation. Selig describes his role as "serving President Donald J. Trump," keeps a MAGA hat visible in interviews, and employs a chief of staff who previously worked for a pro-Trump Super PAC. That alignment has delivered favorable treatment in contrast to the Biden era.
Yet any Trump backlash over the current odds could pressure Selig to adjust the agency's posture. The platforms have heightened visibility by partnering with Fox, CNN, CNBC and The Wall Street Journal for election coverage, making it more likely Trump notices the forecasts. Trump has attacked polls on Truth Social as "Crooked and Corrupt" and sued Iowa pollster J. Ann Selzer even after winning the 2024 election.
Political Hedging and Credibility Pressures
Kalshi has added Democratic-connected figures including ex-Obama deputy press secretary Eric Schultz, former Obama and Biden campaign staffer John Bivona, and Obama campaign manager Stephanie Cutter to its advisory ranks. It also hired Trump policy communications director Jacki McGavick for public relations. The moves reflect awareness that a Democratic midterm sweep could trigger hearings, probes into Trump family financial ties, and renewed pushes to restrict sports contracts.
Sports betting drives most revenue, but the platforms position themselves as election "truth machines." Academic data cited in the reporting shows they have been well-calibrated in election years despite long-shot bias. Kalshi recently completed a raise at a $40 billion valuation after crossing $1 billion in the summer of 2025. Public mockery if the forecasts miss could follow, though the firms have absorbed prior criticism. Anger from Trump would present a harder challenge.
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