It is an exceptionally good time to operate a prediction market. Companies including Kalshi and Polymarket spent the beginning of the decade dealing with regulations under a Democratic president, but the Trump administration has greeted the industry with remarkable generosity.

The Commodity Futures Trading Commission has been helping prediction markets expand into every state, including states with laws that explicitly ban their operations. The result is a federal push that functionally overrides state restrictions while leaving federalism conveniently discarded.

That expansion is apparently not enough for Kalshi. The company is now seeking government permission to offer margin trading, a move that would allow users to gamble on the platform using money they do not actually have.

Despite the financial terminology, the activity taking place on prediction markets bears little resemblance to conventional trading. The CFTC is helping the companies maintain the notion that their products resemble commodities or futures markets, where farmers can hedge against possible crop losses.

The performance numbers expose just how flimsy that comparison is. At Kalshi, unprofitable users outnumber profitable ones by almost 3 to 1, hardly the sort of market that any sensible participant would rush to join.

Polymarket, Kalshi’s largest rival, reports similarly brutal results. Only 2% of its traders have ever made more than $1,000, while just 0.033% have made more than $100,000 through the platform.

The anonymity surrounding prediction markets makes the situation even murkier. Ordinary participants can find themselves betting against actual insiders without knowing who is on the other side, creating a gambling environment with especially miserable odds.

Allowing margin trading would magnify those risks. A participant puts up less than the full cost of a trade, gaining leverage to make a larger wager and creating the possibility of a larger win or a significantly larger loss.

That structure is dangerous enough in any market. In prediction markets, where the numbers already show that most participants are losing, giving users access to wagers funded with money they do not possess would make an ugly arrangement even worse.

Kalshi also has a politically connected advantage in Donald Trump Jr., who is on the company’s payroll as an adviser. His presence gives the business a direct link to the Trump family while the administration’s regulators are treating the industry with an unusually friendly hand.

Trump Jr. received his stake in Kalshi for free as part of his advisory role, meaning any benefit from that stake is profit for him. He was also deployed to tell attorneys general in red states to back away from regulating prediction markets.

His involvement does not stop with Kalshi. Trump Jr. also sits on the board of Polymarket, which asked the CFTC in July for permission to offer margin trading, though the commission has not yet provided an answer.

The overlap between the Trump family and these companies makes the prospect of meaningful regulation look increasingly remote. The family is also considering opening its own prediction market, adding another potential financial interest to an already cozy arrangement.

The central promise of these platforms is dressed up in the respectable language of markets and trading, but the outcomes look much more like gambling with lousy odds. Most users lose, anonymous insiders can hold an advantage, and the companies now want customers to wager borrowed money.

With the CFTC helping prediction markets spread despite state prohibitions, the industry already has plenty to celebrate. If margin trading receives approval too, this wild corner of Trump era gambling could become much wilder, riskier, and worse for the people placing the bets.