The conflict of interest
Donald Trump Jr. no longer advises Kalshi after his venture firm, 1789 Capital, made a significant investment in the prediction market’s main rival, Polymarket. Kalshi stated the two sides mutually agreed to end the advisory role after his firm’s investment in a competitor this past summer. The two sides began discussing a split in August after 1789 Capital raised its Polymarket stake, according to the Associated Press. The decision to end the arrangement follows after 1789 Capital led a $1 billion Polymarket raise in August, which included a $300 million contribution from the firm that manages the venture capital interests of Donald Trump Jr. I see the split as a direct response to the conflict created when Trump Jr. advised Kalshi while his firm funded its competitor. Kalshi CEO Tarek Mansour told MS NOW in early October that the ties posed an "optics issue," although he said the company never used those connections to gain favor with the government. This decision follows last week’s midterm sweep that handed Democrats control of both chambers of Congress.
Political scrutiny and equity
Democrats intend to examine the Trump family’s links to both Kalshi and Polymarket, the Associated Press reported. An aide told Politico that Senator Elizabeth Warren, who expects to take control of the Senate Banking Committee in January, has listed Trump family crypto businesses and prediction markets among her early oversight targets. This political pressure arrives as Kalshi’s valuation climbed 20-fold to $40 billion. Trump Jr. joined Kalshi as a strategic adviser in January 2025, just days before his father’s second inauguration, and received about $300,000 in equity. This stake has since undergone heavy dilution because of new share issuances. I find the sudden departure of an adviser with a $300,000 interest in a $40 billion firm to be a calculated move to avoid the scrutiny Elizabeth Warren plans to bring to the prediction market industry. Trump Jr. joined the Polymarket advisory board in August 2025 and maintains that role. Both Kalshi and Polymarket reject any suggestion that financial links to the Trump family shaped how the Trump administration regulated the industry through the Commodity Futures Trading Commission. President Trump has publicly backed the Commodity Futures Trading Commission as the sole regulator of prediction markets while various states challenge the platforms.
