Mick Mulvaney, the former acting White House Chief of Staff under the Trump administration, is spearheading a high-stakes advocacy campaign to reclassify prediction market “event contracts” as gambling, a move that threatens the current regulatory status of the billion-dollar industry. Leading the newly formed “Gambling Is Not Investing” coalition, Mulvaney contends that platforms offering wagers on sporting and political outcomes are bypassing state gambling laws by masquerading as financial derivative markets.
The ‘Duck Test’ for Digital Wagering
Mulvaney’s argument hinges on a simple premise: the nature of the transaction defines the asset. Drawing on his extensive experience in federal oversight, Mulvaney asserts that the sports-related contracts currently dominating prediction markets are indistinguishable from traditional sports betting. “If it looks like a sports bet, if it sounds like a sports bet, if it pays off like a sports bet, if it’s on a sporting event—it’s a sports bet,” Mulvaney stated, invoking the classic “duck test” to challenge the industry’s current classification.
This sentiment is gaining traction among prominent Republican figures. Former New Jersey Governor Chris Christie and current Utah Governor Spencer Cox have recently voiced similar criticisms, arguing against the federal government’s lenient approach to these platforms. The coalition led by Mulvaney includes influential conservative groups such as Moms for America, Frontiers of Freedom, and Consumer Action for a Strong Economy, signaling a growing rift within the GOP regarding financial deregulation versus consumer protection.
A Jurisdictional War: CFTC vs. State Authorities
At the heart of the conflict lies a jurisdictional battle between the Commodity Futures Trading Commission (CFTC) and state regulators. Currently, the CFTC oversees prediction markets like Kalshi and Polymarket, treating their offerings as derivatives. However, state authorities argue this classification serves as a legal loophole that allows companies to operate without the rigorous licenses required for gambling entities. Several states are currently pursuing litigation against these platforms for alleged violations of local betting statutes.
The CFTC, led by Michael Selig, has doubled down on its authority. Selig recently signaled a confrontational stance, suggesting the agency would defend its jurisdiction in court against those who challenge its oversight. In an unprecedented move, the CFTC filed a brief supporting the cryptocurrency platform Crypto.com in its legal battle against Nevada regulators, further cementing the agency’s position that these markets belong under federal financial rules rather than state gaming commissions.
The Trump Family’s Growing Stake in the Industry
The push for stricter regulation comes as the Trump family deepens its ties to the prediction market sector. Truth Social, the media entity majority-owned by Donald Trump, is reportedly developing “Truth Predict,” its own entry into the event contract space. Furthermore, Donald Trump Jr. serves as an adviser to both Kalshi and Polymarket, with his venture capital firm holding a direct investment in the latter.
This intersection of politics and private interest creates a complex landscape for Mulvaney’s coalition. During the Biden administration, the CFTC maintained a more restrictive posture, famously fining Polymarket $1.4 million and temporarily halting its U.S. operations for failing to register properly. Under the current administration, the agency’s pivot toward a “friendlier” approach appears to align with the White House’s broader interest in the sector.
Seeking Common Sense Guardrails
Despite the administration’s general preference for deregulation, Mulvaney remains optimistic that he can persuade the White House to implement “common sense” guardrails. He acknowledges the default Republican position of minimal intervention but points to his tenure in the first Trump administration as evidence that necessary regulations can be enacted when justified by public interest.
As prediction markets continue to explode in popularity—driven largely by sports and political forecasting—the “Gambling Is Not Investing” coalition aims to force a national conversation on where financial innovation ends and unregulated gambling begins. The outcome of this lobbying effort could fundamentally reshape the legal landscape for fintech and betting platforms across the United States.
