Prediction markets company Kalshi has ended its advisory agreement with Donald Trump Jr after his venture capital firm, 1789 Capital, increased its investment in rival platform Polymarket.
A spokesperson for Kalshi, which is valued at approximately $40 billion, confirmed that both sides had agreed to end the arrangement following 1789 Capital’s investment in Polymarket.
“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.
Kalshi appointed Trump Jr as a strategic adviser in January 2025 and provided him with an equity stake. The Financial Times reported at the time that his stake was worth approximately $300,000.
Investment in Polymarket Triggered Conflict-of-Interest Discussions
Discussions about ending the contract began in August, when 1789 Capital became involved in Polymarket’s latest funding round, according to Kalshi’s spokesperson.
A person familiar with the matter said Kalshi began discussing the investment after news of the venture capital firm’s involvement became public. The company later contacted Trump Jr during the autumn to address the potential conflict of interest.
The Kalshi spokesperson said the decision was not influenced by political considerations. However, two sources familiar with the matter said concerns had been raised internally about the possible consequences of a Democratic victory in both chambers of Congress during the midterm elections.
The sources also said Trump Jr’s position as an adviser could have exposed Kalshi to congressional scrutiny because of his relationship with US President Donald Trump.
Kalshi maintained that it had neither considered nor discussed the political implications of the arrangement.
Trump Jr Was Hired to Reach Conservative Audiences
A third source familiar with Kalshi’s activities said the company sought to expand its reach among different political and demographic groups in early 2025.
According to the source, Trump Jr was brought on as an adviser and compensated with company equity for guidance on marketing Kalshi to conservative audiences, including supporters of the Make America Great Again movement.
Polymarket declined to comment on the termination of the advisory agreement. Trump Jr did not immediately respond to a request for comment, while a representative for 1789 Capital also declined to comment.
Democratic Election Gains Could Increase Congressional Scrutiny
The end of the agreement comes as prediction market companies face the possibility of increased scrutiny from US lawmakers.
Democrats have indicated that they intend to use congressional investigative powers to examine business relationships involving the White House and President Trump’s family.
Senator Elizabeth Warren has pledged to take action against insider trading in prediction markets, while Democratic Senator Chris Murphy and Representative Greg Casar introduced legislation earlier this year seeking to prohibit bets on military operations and other sensitive government activities.
Several other proposals aimed at restricting prediction market activities are also progressing in Congress.
Prediction Markets Gained Attention During the 2024 Election
Prediction markets attracted widespread attention during the 2024 US presidential election after their forecasts differed significantly from traditional opinion polls and indicated that Trump would win.
Kalshi highlighted the accuracy of its predictions at the time and criticised pollsters and traditional media organisations for failing to anticipate Trump’s decisive victory.
Both Kalshi and Polymarket have also made substantial political donations to candidates and groups affiliated with both major US parties this year, according to campaign finance and other records reported by Reuters.
Questions Over Insider Trading and Market Regulation
The industry has faced growing questions over the legality and ethics of certain trades following a series of unusually well-timed bets on prediction platforms this year.
Those transactions have fuelled concerns about whether individuals with access to confidential information could use it to profit from market activity.
The proposed restrictions and calls for investigations come as lawmakers consider how prediction markets should be regulated, particularly when contracts involve military operations or sensitive government decisions.
