Ex-Trump Official Targets Prediction Markets
▼ Summary
– Mick Mulvaney, a former Trump official, leads a new coalition called Gambling Is Not Investing that lobbies for prediction markets to be regulated under state gambling laws.
– There is a political battle over regulation, with critics viewing prediction markets as gambling and state authorities pursuing lawsuits against companies like Kalshi.
– The federal Commodity Futures Trading Commission (CFTC) currently oversees prediction markets as derivatives, a classification its head defends despite opposition.
– The Trump family has numerous ties to the prediction market industry, including ventures by Truth Social and Donald Trump Jr.’s advisory roles.
– A growing wing of the Republican party, supported by conservative advocacy groups, believes prediction markets need more regulatory guardrails.
A former high-ranking official from the Trump administration is spearheading a new political effort to fundamentally change how prediction markets are regulated, arguing they are essentially sports betting in disguise and should be governed by state gambling laws, not federal financial rules. Mick Mulvaney, who served as acting White House chief of staff, is now leading a coalition called Gambling Is Not Investing. He contends that contracts based on sports outcomes are indistinguishable from traditional wagers, regardless of their classification on financial platforms.
“You’re speaking with the only former congressman who has actually won a poker tournament in Las Vegas,” Mulvaney remarked, highlighting his personal familiarity with gambling. He draws a direct parallel, stating, “If it looks like a sports bet, sounds like one, pays off like one, and is about a sporting event, then it is a sports bet.” His initiative aligns with other prominent Republicans, including former New Jersey Governor Chris Christie and Utah Governor Spencer Cox, who have recently criticized the current federal regulatory framework.
The core of this debate centers on jurisdiction. Currently, the Commodity Futures Trading Commission (CFTC) oversees prediction markets, treating them as derivatives markets. This means they offer “event contracts” on outcomes rather than direct bets. Critics, including Mulvaney and several state attorneys general, see this as a regulatory loophole. Multiple states are actively pursuing lawsuits against companies like Kalshi, alleging violations of local gambling statutes. “I have great respect for the CFTC, but they are simply not structured to handle this,” Mulvaney asserted.
This political clash has intensified recently. A group of 23 Democratic senators urged the CFTC to allow state legal challenges to proceed, a request the agency firmly rejected. CFTC Chairman Rostin Behnam has defended the agency’s authority, even taking the unusual step of filing a legal brief in support of Crypto.com, which is facing a lawsuit from Nevada over its prediction market products. This stance marks a shift from the previous administration; under President Biden, the CFTC fined the platform Polymarket $1.4 million for operating an unregistered exchange.
The current regulatory posture appears to align with the White House’s interests. The Trump family has several connections to the prediction market industry. Truth Social, the platform largely owned by former President Donald Trump and his family, is reportedly developing its own market called “Truth Predict.” Furthermore, Donald Trump Jr. serves as an advisor to both Kalshi and Polymarket, with his venture firm investing in the latter.
Despite these connections, the formation of Gambling Is Not Investing signals a growing faction within the Republican Party advocating for stricter oversight. The coalition includes conservative advocacy groups such as Moms for America and Consumer Action for a Strong Economy. Mulvaney believes he can persuade the administration, noting its general preference for lighter regulation. “I understand that instinct, and I respect it,” he said. “But I also recall that during the first Trump term, when common sense dictated sensible regulation, we implemented it.”
(Source: Wired)
