Kalshi ends Trump Jr. advisory deal over Polymarket investment

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Kalshi has ended Donald Trump Jr.’s advisory contract after his venture capital firm, 1789 Capital, deepened its investment in rival prediction market Polymarket.

Summary

Kalshi says both sides agreed to end the role, with discussions beginning in August.
1789 Capital previously committed roughly $300 million to lead a $1 billion Polymarket funding round.
Trump Jr. joined Kalshi in January 2025 before taking a seat on Polymarket’s advisory board.
Prediction market operators face disputes over state gambling laws and federal oversight of event contracts.

Reuters reported on Nov. 12 that a Kalshi spokesperson attributed the departure to 1789 Capital’s investment in its competitor over the summer. The company thanked Trump Jr. for helping bring customers to the platform and said talks about ending his contract began in August, when his firm led Polymarket’s latest financing.

“We have mutually agreed to end Don’s advisory role after his firm’s significant investment in a competitor this past summer,” the spokesperson said.

Polymarket and Trump Jr. did not immediately respond to Reuters’ requests for comment.

Kalshi’s former adviser backed a $1 billion rival funding round

As crypto.news previously reported, 1789 Capital agreed to contribute approximately $300 million toward a Polymarket funding round targeting $1 billion in September. The planned financing valued the company at $21 billion, compared with a valuation close to $15 billion before the transaction.

A spokesperson for the investment firm confirmed the financing details at the time. Its earlier investment of roughly $200 million would bring its combined commitments to around $500 million with the new contribution. The September figures described the planned financing and commitments, not a publicly documented final ownership percentage.

Trump Jr., a partner at 1789 Capital, joined Polymarket’s advisory board in August 2025 following the firm’s initial investment. His relationship with Kalshi began earlier: the company appointed him strategic adviser in January 2025, before his father returned to the White House.

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In its original announcement, Kalshi CEO Tarek Mansour described a role involving market strategy, growth, partnerships and reaching new audiences. Trump Jr. said his family had used the platform during the 2024 presidential election and praised its election-night signals.

The Financial Times reported when he joined that he received a stake then worth $300,000, according to Reuters. The departure report did not disclose what would happen to that equity.

State challenges dispute who can regulate prediction markets

Both companies operate in an industry where federal registration and state gambling laws have become the subject of competing court claims. Kalshi argues that event contracts listed on federally regulated exchanges fall within the Commodity Futures Trading Commission’s jurisdiction. State authorities have challenged products they consider unlicensed gambling.

A July 27 Minnesota court injunction blocked enforcement of the state’s new prediction market statute against CFTC-registered exchanges while related lawsuits proceeded. U.S. District Judge Katherine Menendez granted preliminary relief to the federal government, the CFTC, Kalshi and Polymarket US.

The court’s order found the plaintiffs likely to succeed on at least part of their argument that federal law displaced the state statute. The decision addressed preliminary relief, leaving the final merits for later proceedings.

The ruling described event contracts as instruments through which traders take positions on outcomes in sports, politics and culture. A correct prediction can produce a payout, while an incorrect one can cost the trader the money committed to the contract.

Minnesota’s statute was scheduled to take effect Aug. 1 and imposed criminal penalties for operating covered prediction markets and supporting activities. In their lawsuits, the exchanges challenged restrictions on advertising and receiving information from third parties alongside the operating ban.

Federal scrutiny includes contracts tied to public speeches

Federal regulators have separately examined trading risks within prediction markets. In September, the CFTC issued a mention market warning covering contracts settled by whether named individuals say certain words, attend events, or interact with other people.

Its Sept. 22 advisory announcement said such products carry heightened manipulation risks because payouts depend on individual conduct that may lack independent verification. Exchanges must provide analysis specific to each contract and comply with requirements to list products that are not readily susceptible to manipulation.

The agency reminded designated contract markets that their duties arise under Core Principle 3 of the Commodity Exchange Act. Its announcement described limited circumstances in which mention contracts could meet existing law, with design and submission requirements applying to the exchanges offering them.

On Aug. 28, the agency settled charges against former White House teleprompter operator Gabriel Perez, finding that he used advance access to presidential speeches to trade mention contracts between December 2025 and February 2026.

Perez was ordered to return $107,539.02 in trading profits and pay a $65,000 civil penalty, with a three-year trading ban. The CFTC credited KalshiEX with assisting its investigation and said the penalty reflected a substantial discount for Perez’s cooperation.

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