Key Takeaways
- Trump Jr.-linked 1789 Capital is reportedly investing $300 million in a $1 billion funding round for Polymarket.
- The firm previously invested approximately $200 million in Polymarket.
- It comes as Kalshi permanently bans George Santos, intensifying scrutiny of insider trading.
Polymarket is reportedly raising $1 billion at a $21 billion valuation, with an investment firm linked to Donald Trump Jr. expected to provide almost one-third of the funding.
1789 Capital, where Trump Jr. serves as a partner, is investing approximately $300 million and leading the round, according to Bloomberg.
The proposed deal would bring Polymarket closer to rival Kalshi, which secured its own $22 billion valuation earlier this year.
However, the fresh capital arrives as prediction markets face mounting questions about manipulation and the use of privileged information.
Kalshi has permanently banned former congressman George Santos over trades linked to an event he could personally control, following authorities’ pursuit of several alleged insider-trading cases.
1789 Capital Deepens Its Polymarket Investment
The latest funding round significantly expands 1789 Capital’s existing position in Polymarket.
1789 Capital invested approximately $200 million in the platform, according to the Journal.
If the new round closes on the reported terms, its total investment would rise to around $500 million, making it one of Polymarket’s largest financial backers.
Polymarket publicly announced a “strategic investment” from 1789 Capital in August 2025, although neither company disclosed its size at the time.
The announcement also placed Trump Jr. on Polymarket’s advisory board.
Donald Trump’s eldest son argued that prediction markets could offer an alternative to opinion polls and traditional political commentary by attaching real financial consequences to users’ forecasts.
Trump Jr. already had connections to the wider industry.
Kalshi appointed him as a strategic adviser in January 2025, months before he joined Polymarket’s board.
The Financial Times subsequently reported that he received a $300,000 equity stake in Kalshi as part of the arrangement.
Trump Jr.’s Firm Reports Rapid Growth and Major Returns
Polymarket has become part of a wider expansion at 1789 Capital.
The investment firm was established in 2022 by Omeed Malik and Christopher Buskirk, with Trump Jr. joining as a partner shortly after his father won the 2024 presidential election.
Its assets under management have since grown from a reported $150 million in 2024 to approximately $3.5 billion by May 2026, according to figures compiled from regulatory filings.
A New York Times report, citing a person familiar with the firm’s performance, said its main fund had generated returns of approximately 200% as of June 30.
Other investments include stakes in SpaceX, defense technology company Anduril, and artificial intelligence businesses Cerebras and Reflection AI.
The firm’s growth has also attracted political scrutiny.
Democrats on the House Judiciary Committee have requested information about its investments, alleging that several portfolio companies benefited from federal contracts or policy changes under the Trump administration.
Kalshi Permanently Bans George Santos
The latest Polymarket funding reports emerged alongside one of the most significant disciplinary actions yet taken by a prediction-market operator.
On August 28, Kalshi permanently suspended former Republican congressman George Santos.
The firm concluded that he had manipulated the market concerning his attendance at President Trump’s 2026 State of the Union address.
According to Kalshi’s disciplinary notice, Santos placed a series of large trades during February despite being able to determine the market’s eventual outcome himself.
Kalshi’s compliance department found that Santos subsequently made false or misleading public statements about whether he intended to attend the address.
Those statements moved contract prices in ways that benefited his trading positions, resulting in a profit of $17,839.
The platform imposed a $71,356 penalty and permanently barred Santos from accessing Kalshi directly or indirectly.
It marks the first lifetime trading ban issued by the company, according to the BBC.
The action followed a separate investigation by the Commodity Futures Trading Commission.
In July, the CFTC ordered Santos to return $17,569 in trading profits and pay a $17,500 civil penalty. The regulator also imposed a three-year trading ban.
Santos responded defiantly on X, thanking Kalshi for the ban and questioning how much longer the platform would remain in business.
Prediction Markets Face an Insider-Trading Test
The Santos case is part of a broader enforcement push targeting users who trade contracts using confidential information.
In February, the CFTC issued an industry advisory after Kalshi uncovered two earlier cases involving nonpublic information and fraudulent trading.
Polymarket has faced similar concerns.
In April, federal prosecutors charged US Army soldier Gannon Ken Van Dyke with allegedly using classified information about a military operation in Venezuela to make approximately $409,881 from Polymarket contracts.
The Justice Department alleged that Van Dyke placed around $33,000 across Venezuela-related markets while involved in planning the operation to capture Nicolás Maduro.
The allegations have not yet been proven in court, and the department said Polymarket cooperated with the investigation.
With Polymarket and Kalshi now commanding valuations above $20 billion, their ability to detect and punish misconduct could determine whether prediction markets gain mainstream acceptance.
