At the helm of Government Curated, Donald Gainsborough has a front-row seat to the seismic shifts where policy, power, and big money collide. He has watched as the founders of prediction markets like Polymarket and Kalshi, two twenty-somethings, turned a regulatory crackdown into a multi-billion-dollar empire in the heart of Trump’s Washington. We sat down with him to unpack how they masterfully navigated federal agencies, leveraged powerful political alliances, and are now facing down ethical dilemmas and new competition as they aim to make betting on everything from elections to celebrity weddings a cornerstone of American finance.
The shift from a Biden-era raid on Shayne Coplan’s apartment to the Trump administration dropping its investigation was dramatic. Could you detail the key steps and high-profile hires, like David Urban, that Polymarket and Kalshi took to navigate this regulatory reversal so successfully?
The turnaround was nothing short of stunning, and it’s a masterclass in D.C. influence. You have to remember the atmosphere under Biden; it was hostile. The CFTC wasn’t just investigating, they were sending agents for an early-morning raid on Coplan’s apartment, which is a visceral, aggressive move designed to send a message. At the same time, they were actively blocking Kalshi from taking bets on U.S. elections. The pivot began with a gamble on a new administration, and when it paid off, they went all in. They immediately brought in heavy-hitters with direct lines to the new center of power. Hiring David Urban, a key Trump campaign adviser, wasn’t just about getting a lobbyist; it was about signaling alignment and gaining immediate access. These weren’t subtle moves; they were calculated, high-stakes plays to transform their regulatory nightmare into a “seminal moment,” and it worked faster than anyone could have imagined.
Donald Trump Jr. is now an adviser to both Polymarket and Kalshi. Starting with the initial meeting at the Republican National Convention, can you elaborate on how this relationship developed and what specific value or access he provides beyond his family’s interest in non-traditional finance?
That meeting in Milwaukee at the RNC was the catalyst. Picture the scene: Shayne Coplan, in a simple dark T-shirt, connects with Donald Trump Jr. and financier Omeed Malik. It wasn’t a chance encounter; it was brokered by a mutual investor. This connection blossomed because the Trump family already had a philosophical interest in disruptive, non-traditional finance like crypto. Trump Jr. saw these companies not just as businesses, but as fellow fighters who had battled the same Biden-era regulators he and his family criticized. He even said he used Kalshi on election night to track the win “hours ahead of the fake news media.” So his value isn’t just a famous name; it’s a powerful testimonial and a shared ideology. He became a public champion, which in this political climate provides a layer of political insulation and a megaphone that traditional lobbyists can’t buy.
With valuations now at $9 billion for Polymarket and $11 billion for Kalshi, could you describe the strategy behind securing major partnerships with entities like the NYSE’s owner and media giants like CNN? What specific metrics or milestones made them so attractive to these established players?
The strategy was to prove their concept was not only viable but superior, and they did it in the most high-profile arena possible: a presidential election. When they called Trump’s victory ahead of established prognosticators, they demonstrated the predictive power of their markets in a way no PowerPoint presentation ever could. That’s what gets the attention of Wall Street titans like Jeff Sprecher, the CEO of Intercontinental Exchange. These legacy players saw the massive trading volume—over $150 million bet on the 2028 election on Polymarket alone—and recognized a new, powerful source of data and revenue. The partnerships with CNN and CNBC followed a similar logic; for media, these markets offer a compelling, real-time alternative to traditional polling. The milestone wasn’t just a regulatory win; it was proving that the wisdom of the crowd, fueled by real money, was a product that established giants needed to be a part of.
A former CFTC official described Kalshi as “extremely, extremely aggressive,” even cold-calling commissioners. Can you provide an anecdote that illustrates this assertive approach, and how does this strategy, including suing the agency over election betting, differ from how traditional financial firms interact with regulators?
The “cold-calling” is the perfect example of their approach. Traditional financial firms treat regulators with a certain deference, working through layers of lawyers and lobbyists with carefully scheduled, formal meetings. Kalshi, on the other hand, acted with the audacity of a tech startup. Imagine a commissioner’s phone ringing, and it’s the head of a firm they’re actively regulating, wanting to talk directly. It’s unheard of. This wasn’t just one call; it was a persistent pattern of being “all up in everybody’s face.” Suing the CFTC over the election betting ban was the ultimate expression of this philosophy. While a Wall Street bank would spend years lobbying behind the scenes, Kalshi took the agency to court and won. This assertive, almost confrontational style signals they believe they are the future and that the regulatory world needs to catch up to them, not the other way around.
Dorothy DeWitt compared the rise of these markets to a “Black Mirror” episode, citing risks like addiction and rigged events. As new competitors like Robinhood enter, how are Polymarket and Kalshi specifically addressing these ethical concerns and the legal challenges from state gambling regulators?
The “Black Mirror” comparison really captures the anxiety these markets provoke. The core of their defense is to frame themselves not as gambling platforms but as sophisticated, federally regulated financial exchanges. They argue they operate under the CFTC with strict consumer protections, which they see as a significant step up from the world of casinos and sportsbooks. When state regulators, like Senator Cortez Masto in Nevada, call their sports markets “illegal gambling,” the companies push back by asserting federal preeminence, claiming they only answer to the CFTC. They are trying to stay ahead of the narrative by positioning their products as tools for financial hedging and information discovery, rather than just placing bets. The real test will be whether this legal and public relations strategy can hold up as the lines blur and the potential for real-world harm, like addiction or event manipulation, becomes more pronounced.
What is your forecast for the prediction market industry over the next five years, especially regarding its potential to displace traditional polling and its clash with state-level gambling laws?
Over the next five years, I believe we’ll see this industry’s “move fast and break things” ethos collide forcefully with the slow, deliberate pace of American law. On one hand, the potential is enormous. I expect their influence on election forecasting to grow exponentially, potentially making traditional polling look antiquated, especially as media outlets integrate their real-time odds more deeply into coverage. We could easily see the industry grow from its current $2 billion in revenue to over $10 billion by 2030, just as analysts predict. However, the clash with state gambling laws is a sleeping giant that is beginning to stir. As these markets push further into sports and other areas, they will face a patchwork of state-level legal challenges that federal regulation may not be able to sweep away. The forecast is for explosive growth shadowed by intense, protracted legal battles that will ultimately define whether this becomes the next stock market or the next regulatory quagmire.
