Ex-Trump Official Targets Prediction Markets

Former Trump administration official Mick Mulvaney is leading a new coalition called Gambling Is Not Investing, advocating for the regulation of prediction markets by state gambling laws. Mulvaney, known for his love of gambling, believes that prediction markets, with their sports contracts, are essentially sports betting disguised as something else. He argues that if it looks like a sports bet, sounds like a sports bet, and pays off like a sports bet, then it should be treated as a sports bet.

Joining Mulvaney in this initiative are other prominent Republicans such as former New Jersey Governor Chris Christie and current Utah Governor Spencer Cox, who are all pushing for more regulation of prediction markets. The battle over the regulation of prediction markets is becoming increasingly political, with state authorities filing lawsuits against companies like Kalshi for allegedly violating state gambling laws.

The federal level regulation of prediction markets falls under the jurisdiction of the Commodity Futures Trading Commission (CFTC), which currently classifies these platforms as derivatives markets. While traditional sportsbooks allow customers to place bets on game outcomes, prediction markets offer event contracts on various topics, with sports events being the most popular among users. However, critics argue that this distinction is merely a loophole, prompting calls for tighter regulations on these platforms.

Recently, 23 Democratic Senators wrote to the CFTC urging them to allow existing court cases against prediction market companies to proceed. However, CFTC head Michael Selig maintains that prediction markets are correctly classified and within the agency’s jurisdiction. As the debate heats up, the agency has even taken the unprecedented step of supporting a cryptocurrency platform facing a lawsuit over its prediction market offering.

Under the Biden administration, the CFTC fined Polymarket and temporarily blocked its operations in the US for failing to register as a derivatives market. Despite this, the agency’s more favorable approach seems to align with the current administration’s interest in the industry, especially as the Trump family has notable ties to the prediction market world.

The launch of Gambling Not Investing signifies a growing faction within the Republican party that believes prediction markets require more oversight. Mulvaney, who is leading this advocacy coalition, hopes to make his case to the White House, acknowledging their propensity to regulate less but emphasizing the need for common-sense regulation when necessary. With support from conservative consumer advocacy groups, including Moms for America, Consumer Action for a Strong Economy, and Frontiers of Freedom, Mulvaney and his coalition are determined to advocate for stricter regulations on prediction markets.