Kalshi ended Donald Trump Jr.’s advisory contract on Thursday after 1789 Capital, the firm associated with Trump Jr., invested in rival prediction market Polymarket. Kalshi described the separation as mutual and said the investment prompted the decision.

Trump Jr. joined Kalshi as a strategic adviser in January 2025 and received an equity stake. The Financial Times reported that the stake was worth about $300,000 at the time. Reuters reported the departure on November 12, citing Kalshi and people familiar with the discussions.

Kalshi Cites Investment in Rival Platform

A Kalshi spokesperson told Reuters that the company and Trump Jr. agreed to end the relationship after 1789 Capital invested in a competitor. The spokesperson also credited Trump Jr. with helping Kalshi reach more customers.

1789 Capital led Polymarket’s latest funding round. Discussions about Trump Jr.’s advisory contract began in August, when the investment became public, and Kalshi contacted him in the fall to discuss the potential conflict. A source familiar with the matter said the exchange raised the issue directly with Trump Jr. The discussions continued for several months.

Reuters did not disclose the size of 1789 Capital’s investment or the terms of its stake in Polymarket. It also did not say whether ending the advisory contract affected Trump Jr.’s ownership interest in Kalshi.

Kalshi said political considerations played no role in the decision. Two people familiar with internal company discussions told Reuters that some employees were concerned about possible consequences after Democrats won both chambers of Congress. That account differs from Kalshi’s stated explanation, which focused on 1789 Capital’s investment in a competing platform. The episode illustrates how ties between prediction market companies and high-profile political figures have become part of the industry’s regulatory debate.

Trump Jr.’s role connected him to one prediction market while his firm backed another. Neither Trump Jr. nor Polymarket immediately responded to Reuters’ requests for comment.

Prediction Markets Face Regulatory Scrutiny

Kalshi and Polymarket allow customers to trade contracts tied to real-world outcomes, including elections, economic developments, sports and political decisions. The platforms compete for users, trading volume and liquidity. Customers buy and sell event contracts whose prices reflect the market’s perceived likelihood of an outcome.

Prediction markets received broader public attention after Donald Trump won the 2024 presidential election. Their forecasts diverged from some traditional polling, and Kalshi promoted its election predictions while criticizing pollsters that did not forecast Trump’s victory, Reuters reported.

The industry is now facing increased scrutiny from lawmakers and regulators in Washington and elsewhere. The debate includes market integrity, insider-trading concerns, consumer protections, state gambling laws and the scope of federal jurisdiction.

Sports-related contracts have become a particular flashpoint. Nevada Senator Catherine Cortez Masto challenged the Commodity Futures Trading Commission’s approach to sports-related products and wrote that the Trump family was heavily invested in prediction markets. The CFTC is the federal regulator of derivatives markets in the United States.

Cortez Masto wrote on X:

Federal courts have ruled repeatedly that states and Tribes regulate gambling within their territory. Sports “prediction markets” are obviously gambling. But the Chairman of the CFTC is encouraging companies to keep offering these bets in violation of court orders. Let’s be… — Senator Cortez Masto (@SenCortezMasto) November 9, 2026

The post is available at https://x.com/SenCortezMasto/status/2119838284603863228?ref_src=twsrc%5Etfw.

California Representative Ro Khanna separately called for a ban on sports event contracts, arguing that they amounted to sports betting. The comments reflect an ongoing policy dispute over federal and state authority.

Reuters linked the Democratic sweep of Congress to possible scrutiny of companies connected to the White House. Lawmakers have proposed restrictions on contracts related to military operations and other sensitive government actions. How those proposals and the broader federal-state dispute are resolved will shape what event contract platforms can offer customers.

Trump Jr.’s advisory role at Kalshi has ended, but the competition between Kalshi and Polymarket, as well as questions surrounding the regulation of prediction markets, remains unresolved.

Original source: Blockonomi