A fresh legal clash between US states and federal regulators has ignited claims that President Donald Trump is using government power to protect business interests tied to his family — escalating accusations of political interference at the heart of financial oversight.

At issue are fast-growing “prediction market” platforms now facing lawsuits from multiple states. Critics say the federal response has turned a regulatory dispute into a high-stakes political confrontation.

States move— Washington pushes back hard

Arizona, Connecticut and Illinois have launched legal action against firms including Kalshi, Polymarket, Crypto.com and Robinhood, alleging they are skirting gambling laws by repackaging bets as financial products.

The platforms allow users to wager on outcomes ranging from elections to sporting events — a model critics argue is indistinguishable from traditional betting. State officials say the companies are exploiting loopholes to avoid regulation.

The federal government has intervened forcefully. The Commodity Futures Trading Commission (CFTC), under Trump, has filed counter-lawsuits asserting the services are legitimate financial instruments, not gambling.

Family ties under scrutiny

The legal fight has intensified scrutiny of Trump’s connections to the industry. His majority stake in Trump Media & Technology Group links him indirectly to Crypto.com, a key player in the sector.

Meanwhile, Donald Trump Jr. holds advisory roles with both Kalshi and Polymarket, placing him at the centre of the expanding market his father’s administration is now defending.

The overlap has triggered allegations of conflict of interest, particularly as federal action appears aligned with the platforms’ own legal arguments.

Allies, money- and mounting pressure

The network extends further into Trump’s political orbit. High-profile backers, including billionaire investors and major venture capital firms, have poured funding into the same platforms now under scrutiny.

Some of those figures have also contributed heavily to Trump’s campaigns and political infrastructure, tightening the web between finance, policy and power.

Critics cry foul as stakes rise

Activists and watchdogs have reacted sharply, accusing the administration of undermining state authority to benefit private interests.

“This is what corruption looks like,” said campaigner Melanie D’Arrigo, pointing to the overlap between policy decisions and family-linked business activity.

With lawsuits mounting on both sides, the battle now threatens to redefine the limits of federal power — and test how far political influence can reach into America’s financial rulebook.

'What corruption looks like': How Trump 'went to war' to protect family’s businesses

Eat the rich! Don might be tough but it'd be worth giving up my vegetarian diet. Pass the ketchup!