Traders lift odds of Insurrection Act after Trump threats

President Donald Trump’s warning that he might invoke the Insurrection Act has pushed prediction markets sharply higher, as traders reassess the likelihood of an extraordinary domestic military move.

On Kalshi, contracts asking whether Trump will invoke the Insurrection Act during his presidency rose to 64 cents on Tuesday, up more than eight points from the previous day. The market, which had hovered near 50 percent through most of the summer, began climbing steadily in late September and has now reached its highest level since June.

“If people were being killed, and courts were holding us up, or governors or mayors were holding us up, sure I’d do that,” Trump told reporters on Tuesday, according to ABC News. He accused Democratic governors and mayors of turning cities into “war zones” by blocking federal enforcement of immigration laws.

The Reuters report said Trump again left open the possibility that he could use the 1807 law to sidestep court rulings that limit federal troop deployments. The law has not been invoked without a governor’s consent since Lyndon Johnson did so in 1965 to protect civil rights marchers in Alabama.

Traders are also watching a related Kalshi market on what cities Trump will send the National Guard to this year, where the odds of further deployments are rising.

Reuters reported that hundreds of Texas National Guard troops gathered Tuesday at an Army facility in Elwood, Illinois, after a judge allowed their deployment to proceed. A separate judge blocked a planned deployment to Portland. Illinois Governor JB Pritzker called the troop movements “an unconstitutional invasion” and accused Trump of using service members as “political pawns.”

Katherine Kuzminski of the Center for a New American Security told ABC News that the situation “creates a tinderbox,” noting that it risks pitting troops from Republican-led states against Democratic-led cities.

Kalshi’s Insurrection Act market traded between 40 and 50 cents through most of the year, suggesting an even split on whether Trump would invoke the law. The shift to the mid-60s this week shows that traders now believe the president is more likely than not to move forward, though not with certainty.

The last time the Insurrection Act was invoked was in 1992, when President George H. W. Bush sent troops to Los Angeles during the riots following the Rodney King verdict. Trump has repeatedly claimed that federal authority is being “undermined” by local officials and described the situation in cities such as Chicago and Portland as “pure insurrection.”

Analysts told Reuters that any formal invocation would mark a major escalation, giving the military power to conduct arrests and police actions normally reserved for civilian law enforcement. Such a move would almost certainly trigger legal challenges from states and civil rights groups.

The Kalshi markets are reflecting both political and legal uncertainty. The odds imply a significant possibility that Trump could test the limits of executive power, a scenario that could influence how investors think about stability in U.S. institutions and federal-state relations.

If lawsuits delay or restrict deployments, the contract could retreat. But each new Guard movement or courtroom standoff has so far driven “Yes” prices higher, suggesting traders are responding to Trump’s pattern of incremental escalation rather than a single decisive action.

The takeaway:

Sources: ABC News, Oct. 7, 2025; Reuters, Oct. 7, 2025.

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