Kalshi has terminated its advisory relationship with Donald Trump Jr. after his investment firm, 1789 Capital, made a significant investment in the prediction market platform's chief rival, Polymarket.

Prediction markets are venues where traders buy and sell contracts tied to the outcomes of real-world events — elections, economic data, and more — with prices acting as implied probabilities. As that sector has expanded rapidly in the United States, the composition of its platforms' advisers and financial backers has become a subject of increasing attention in Washington.

A Kalshi spokesperson confirmed to Reuters on November 12 that both sides had agreed to end Trump Jr.'s advisory role. The decision comes as prediction market operators face heightened questions in the United States about political ties and regulation.

Discussions Began in August

Talks about ending the agreement started in August, when 1789 Capital led Polymarket's latest funding round. In the fall, Kalshi approached Trump Jr. about the potential conflict of interest arising from his firm's backing of a competing platform.

The company expressed its gratitude for Trump Jr.'s contribution to marketing Kalshi and making the platform more customer-friendly. Kalshi also said it did not yield to political pressure in reaching its decision.

Stakes on Both Sides

Trump Jr. joined Kalshi as a strategic adviser in January 2025, receiving an equity stake in the company. The Financial Times reported at the time that his shares were worth roughly $300,000.

Trump Jr. is a partner at 1789 Capital, the investment firm that emerged as a major backer of Kalshi's competitor through its leading role in Polymarket's most recent funding round — leaving him with financial ties to both companies.

Polymarket declined to comment to Reuters. A spokesperson for 1789 Capital also declined to comment, and Trump Jr. did not immediately respond to a request for comment.

Prediction Markets Under Political Scrutiny

Kalshi's move coincides with growing interest among U.S. lawmakers in prediction markets. The platforms gained widespread attention during the 2024 presidential race, when their forecasts ultimately proved correct. Their rapid expansion has nonetheless raised concerns about insider trading, political influence, and the legality of certain event-based contracts.

Kalshi is registered with the Commodity Futures Trading Commission as a designated contract market, a status that places the platform under direct federal oversight and at the center of any regulatory debate over how the sector should be governed.

According to Reuters, some Kalshi employees worried that the firm's relationship with the president's son could expose the company to congressional probes. Kalshi said there were no political risks to consider when making its decision.

Lawmakers Target Insider Trading

The industry is facing pressure from multiple directions. Senator Elizabeth Warren has called for an end to insider trading on prediction markets. Earlier this year, Senator Chris Murphy and Representative Greg Casar introduced a bill that would label betting on military operations and other sensitive government activity as unpatriotic.

Questions have also been raised about political donations and trades on both Kalshi and Polymarket, while a succession of out-of-sync wagers has raised the specter of some bets being placed on the basis of insider knowledge.

Kalshi's decision to part ways with Trump Jr. deepens a crack in a sector that is increasingly being questioned over how it operates and who is allowed to trade on its platforms. With Warren's call, the Murphy–Casar bill, and the insider-trading questions all still unresolved, how Washington acts on event-contract markets remains the thread to watch for the sector.

Source: Crypto Ninjas