By Anirban Sen and Douglas Gillison
NEW YORK, Nov 12 (Reuters) - Kalshi has ended its advisory contract with Donald Trump Jr after his venture capital firm 1789 Capital increased its stake in arch-rival Polymarket, according to a spokesperson for the $40 billion prediction markets startup.
The Democratic sweep of both houses of US Congress in the midterm elections could bring more scrutiny of companies over links to the White House. Democrats have said they plan to use investigative powers on President
Donald Trump's family business ties.
Kalshi had named Trump Jr a "strategic advisor" in January 2025. Trump Jr was given a stake in the company that the Financial Times reported at the time was worth $300,000.
"We have mutually agreed to end Don's advisory role after his firm's significant investment in a competitor this past summer. We are grateful for his contributions in helping us market Kalshi to more customers," the spokesperson said, adding that the conversations to end the contract started in August since 1789 led Polymarket's most recent funding round.
The Kalshi spokesperson said that there were no political considerations that factored into the decision. Two sources familiar with the matter said there had been some concerns raised within the company about potential ramifications of the Democratic sweep.
Specifically, the sources said that having the president's son as an adviser might open the company up to scrutiny by the US Congress. The Kalshi spokesperson said the company had not considered or discussed political implications.
Kalshi sought inroads with various demographic and political groups in early 2025, according to a third source familiar with the matter. That source said Kalshi contracted with Donald Trump Jr at the time, paying him in equity for guidance in marketing itself to a conservative audience including the MAGA movement.
A Polymarket spokesperson declined to comment. Donald Trump Jr did not immediately respond to a request for comment. A representative for 1789 Capital declined to comment.
Kalshi started discussing 1789's most recent investment in Polymarket in August when news of the venture capital firm's bet became public, according to a person familiar with the matter. Kalshi reached out to Trump Jr during the fall to discuss the conflict of interest, the source added.
GREATER SCRUTINY
Prediction markets first rose to prominence in 2024 as they strongly diverged from traditional opinion polls by signaling a Trump victory. Kalshi, at the time, boasted about the accuracy of its own forecasts, while criticizing pollsters and "traditional media" for failing to anticipate Trump’s "decisive victory."
Campaign finance and other records show both firms this year have made substantial political donations to both parties, Reuters has reported.
Now, such platforms face the prospect of heightened scrutiny in the US Congress. Senator Elizabeth Warren, for instance, has vowed to crack down on insider trading on prediction markets.
Earlier this year, Senator Chris Murphy and Representative Greg Casar, both Democrats, introduced a bill to ban prediction market bets on military operations and other sensitive government actions.
Several other efforts to rein in prediction markets are also moving forward on Capitol Hill, after a series of well-timed market bets this year fueled questions about insider trading on these platforms, while stoking concerns over the legality and ethics of such trades.
(Reporting by Anirban Sen in New York, additional reporting by Douglas Gillison; Editing by Megan Davies and David Gregorio)
