Ex-Trump Official Advocates for Stricter Regulation of Prediction Markets

Mick Mulvaney, a former official in the Trump administration, is spearheading a new initiative to regulate prediction markets under state gambling laws. Mulvaney, who served as President Trump's acting White House chief of staff, argues that the sports contracts offered by these markets are essentially gambling. He likens them to sports bets, suggesting that if they resemble and function like sports bets, they should be treated as such under the law.

Mulvaney is leading a coalition called Gambling Is Not Investing, which aims to lobby for these changes. He is joined by other prominent Republicans, including former New Jersey governor Chris Christie and Utah governor Spencer Cox, who have also criticized the current federal regulatory approach. Christie echoed Mulvaney's sentiment by using the "quack like a duck" analogy to describe prediction markets.

The debate over how to regulate prediction markets is intensifying. Currently, the Commodity Futures Trading Commission (CFTC) oversees these platforms, classifying them as derivatives markets. Unlike traditional sportsbooks that offer bets on game outcomes, prediction markets provide "event contracts" on various outcomes, including sports. Critics argue that this distinction is a loophole, leading several state authorities to pursue legal action against companies like Kalshi for allegedly violating state gambling laws.

In response to these challenges, a group of 23 Democratic senators recently urged the CFTC to allow ongoing court cases to proceed. However, CFTC head Michael Selig maintains that the agency has the correct jurisdiction and has even taken steps to support companies like Crypto.com, which face lawsuits over their prediction market offerings.

Under the Biden administration, the CFTC has adopted a different stance on prediction markets, exemplified by its $1.4 million fine against Polymarket for failing to register as a derivatives market. This shift aligns with the White House's interest in the industry, as the Trump family has significant ties to prediction markets. Truth Social, a social media platform owned by the Trump family, is reportedly planning to launch its own prediction market, Truth Predict. Additionally, Donald Trump Jr. advises both Kalshi and Polymarket, and his venture capital firm has invested in the latter.

The emergence of Gambling Is Not Investing highlights a growing faction within the Republican party advocating for more stringent regulation of prediction markets. The coalition includes conservative consumer advocacy groups such as Moms for America, Consumer Action for a Strong Economy, and Frontiers of Freedom. Mulvaney hopes to persuade the current administration to consider regulation, citing past instances where the Trump administration implemented regulations for common sense reasons.