Bipartisan Scrutiny Turns Up Heat on U.S. Prediction Markets

Mick Mulvaney, former chief of staff for President Donald Trump, is joining the battle against federal regulation of prediction markets as the executive director of Gambling Is Not Investing. 

According to Wired and Front Office Sports, the conservative lobbying group will advocate for state regulation.  The coalition includes groups like Consumer Action for a Strong Economy, Frontiers of Freedom, Hispanic Leadership Fund, and Moms for America, among others.

Mulvaney, a former South Carolina congressman and state lawmaker who backed sports betting legalization in the Palmetto State, told Wired that he can recognize gambling when he sees it. 

Mulvaney, who is known to play poker, said: 

You know the old saying, if it walks like a duck and quacks like a duck, it’s a duck? 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.”

Likewise, he told FOS he doesn’t accept claims that sport-focused contracts are different from traditional sports betting. 

“I just don’t believe that buying a contract on the outcome of the Celtics game tonight isn’t betting. It’s gambling. It just is.”

Mulvaney isn’t alone in his stance. 

Prominent figures from both sides of the political aisle have challenged the Commodity Futures Trading Commission’s laissez-faire approach to regulating event contracts. 

The CFTC oversees prediction markets, which it classifies as derivatives. 

At a typical sportsbook, players bet on wins and losses. In contrast, prediction markets like Kalshi or Polymarket offer a “contract” on the outcome of a game or event. To critics, the difference is the equivalent of “tomato/tomahto.” 

And, so far, several states are suing, such as Nevada, alleging the platforms’ operations violate state laws. 

Predictions Pushback Grows

Mulvaney joins several Republicans already calling for a regulatory shift. 

Last month, former New Jersey Gov. Chris Christie and Utah Gov. Spencer Cox opposed the CFTC’s current regulatory approach.

The Republican pushback is particularly notable because the CFTC has taken a softer stance on event contracts under Trump than under Biden. 

On the other side, five Democrats expressed concern about downsizing at the CFTC’s Chicago office in a letter to CFTC Chairman Michael Selig.

All five signatories (U.S. Sens. Dick Durbin, Amy Klobuchar, Corey Booker, Raphael Warnock, and Adam Schiff) sit on the Senate Committee for Agriculture, Nutrition, and Forestry, which oversees the CFTC. Klobuchar is the Committee’s ranking member.

From the Feb. 26 letter:

“We write to express our deep concern regarding reports that the Central Regional Office of the Commodity Futures Trading Commission (CFTC) in Chicago has gone from 20 enforcement attorneys to none. If accurate, this represents a significant weakening of one of the agency’s most important enforcement hubs.

…staffing in the Division of Enforcement overall has declined by at least 25 percent, perhaps more. These declines come amid broader declines in enforcement activity.” 

This letter follows another sent to Selig on Feb. 23 by six senators. In it, they asked the CFTC to restate its ban on death-related markets. Specifically, they asked the Commission to “clearly reiterate” that it will “categorically” prohibit “perverse” contracts tied to an individual’s death.

“We are writing to express strong concern with prediction contracts that incentivize physical injury or death, and the grave and perverse moral and geopolitical implications of these contracts. These contracts present dangerous national security risks, including creating incentives to incite violence, foment geopolitical conflicts, and disclose classified information.”

Senator Plans Ban of ‘Corrupt’ Markets 

On Feb. 27, U.S. Sen. Chris Murphy posted on X that he would introduce legislation to ban “corrupt and destabilizing” prediction markets. At the time, he cited insiders’ ability to “rig” outcomes as an instigating factor. Recent contracts, including those concerning the U.S. removal of Venezuela President Nicholas Maduro have come under suspicion of insider trading. 

Murphy posted: 

“Update: I’m working on legislation to ban corrupt and destabilizing prediction markets, where insiders who know the outcome (especially in government) can rig the game to favor certain bets.”

Only a day later, Murphy shared his shock at further revelations of insider trading.  This time, six “suspected insiders” earned $1.2M on predictions concerning the U.S. bombing of Iran. Importantly, these trades and the Maduro contracts were conducted on Polymarket’s international site, which operates outside the CFTC’s oversight.

Still, Murphy wrote:

“It’s insane that this is legal. People around Trump are profiting off war and death. I’m introducing legislation ASAP to ban this.”

However, should he move forward, Murphy’s legislation will likely face pushback from the CFTC.

After 23 Democratic Senators urged the agency to allow state-level enforcement to play out, Selig pledged to step in to defend its authority in court. Shortly thereafter, the CFTC filed an amicus brief in support of Crypto.com in Nevada. The state is suing the company over prediction markets offered within state borders.

However, the emergence of the “Gambling Is Not Investing” movement is evidence that not all Republicans are happy with the CFTC’s new attitude. At least in relation to sports markets.

Mulvaney told Wired that he hopes to make his case to Trump’s administration.

“Their default position is going to be to regulate less, not more. And I respect that. But I also know that in the first Trump administration, when there were common sense reasons to do some regulation, that we did.”