Managing Editor
President Donald Trump exercised his powers on Monday to take control of the Washington D.C. police and deploy the National Guard to the capital. The events leading up to that created a dramatic spike in the perceived likelihood that the city could lose its powers of self-governance by 2027, at least in the eyes of gamblers speculating on Kalshi.
“Will DC come under federal control before 2027?” asks Kalshi, in a market that opened on August 7. When that question first went live, speculators placed the odds at around 10%. However, in less than a week, they soared as high as 28% before plunging back below 20%. Even that’s a remarkable number, given what a drastic move it would be to undo over five decades of self-governance. And yet, much of what Trump has done or tried to do in office can fairly be characterized as “drastic.”
The District of Columbia is in a unique position. It’s a federal district, not part of any state, but has had its own local government since 1973. That layer of limited self-determination was added by the Home Rule Act. Yesterday, Trump invoked a little-known provision in that law allowing the federal government to take back control of the D.C. Metropolitan Police Department for up to 48 hours in an emergency.
“This is Liberation Day in D.C.,” he said, recycling a phrase he also employed to describe the unveiling of his global tariff policy earlier this year.
Why Trump Wants Control of D.C.
The President’s struggles with the D.C. local government date back to his first term, particularly the January 6 riots that pitted Trump’s supporters against the District’s police force, among other law enforcement groups. In the aftermath, D.C. Mayor Muriel Bowser was critical of what she said was a lack of preparedness among the federal Capitol Police.
It didn’t take long after his return to office for Trump to begin talking of a potential strong-arm approach to the city. The White House’s narrative is that violent crime is out of control in the capital. Although its murder rate does rank quite high among the nation’s urban areas, media has been quick to point out that crime in D.C. has been on the decline for many years.
The situation came to a head last week when an attempted carjacking by two teenagers resulted in the beating of a former government staffer, Edward “Big Balls” Coristine.
Coristine was a prominent figure in the so-called “Department of Government Efficiency,” responsible for many spending cuts in the early days of the administration. DOGE was led by Elon Musk, with whom Trump has since fallen out. (See also: What the predictions markets think about Musk’s “America Party”).
Whatever Trump’s personal feelings about Musk, he took the opportunity to double down on his rhetoric about crime in Washington and the need to bring it back under federal control.
He has made good on his promises to take temporary control of the D.C. police and activate the National Guard. However, the Kalshi market relates to a more extreme possibility: a federal bill repealing the Home Rule Act and ending D.C. self-governance entirely.
Misunderstandings of Criteria Drive Market Swings
The Kalshi market on D.C. self-governance is a niche one, with only $22,000 in trading volume as of this writing.
What we sometimes see in these less liquid markets is circumstantial evidence that price changes might be driven by speculators reacting to news without fully understanding the terms of the contract.
While Trump’s actions certainly affect the situation, it’s impossible for him to unilaterally “take control” of D.C. in the sense that Kalshi means it. Even if Congress acts to extend the President’s control over the police force, that wouldn’t constitute an end to self-rule in D.C., as there are many other services still controlled by City Council.
Some user comments on the market suggest a belief that control of the city through law enforcement would be sufficient, or that the legislative component would be a mere technicality. One Yes buyer writes:
It’s under his control, that’s the headlines everywhere. It should be a win already, unfortunately we have to wait until he passes a bill about it…
(The President cannot “pass a bill,” of course. That is the job of the legislative branch, and the President leads the executive branch.)
Similar confusion has been playing out at rival site Polymarket over a shorter-term contract regarding the promise to deploy the National Guard on Monday. Disagreement over the meaning of the phrase “active deployment” caused extreme volatility around midday, with the price swinging up to 88% and then down to 7% within the span of 45 minutes. The outcome still officially remains contested, and Polymarket contracts rely on UMA token holders to resolve disputes.
However, a clarification added to the rules today appears to settle the issue:
Trump’s executive action ‘RESTORING LAW AND ORDER IN THE DISTRICT OF COLUMBIA’ on Aug 12, “to mobilize the District of Columbia National Guard and order members to active service” qualifies as active deployment.
