When a former White House chief of staff who freely admits he enjoys gambling decides to lead a crusade against a financial product, it is worth paying close attention. Mick Mulvaney, who served as acting chief of staff during Donald Trump's first administration and previously as director of the Office of Management and Budget, this week launched a new advocacy coalition called Gambling Is Not Investing, with a clear mission: force prediction market platforms to be regulated by state gambling laws rather than federal commodities rules.
The coalition's founding members, as reported by Wired and Front Office Sports, include conservative consumer groups such as Moms for America, Consumer Action for a Strong Economy, and Frontiers of Freedom. Mulvaney serves as executive director and is explicit about what he sees as the core issue. "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," he told Wired, framing his case against sports contracts on prediction-market platforms.
The legal and regulatory backdrop matters here. On the federal level, the Commodity Futures Trading Commission oversees these platforms, which are currently classified as derivatives markets. Where a traditional sportsbook offers customers a bet on which team wins, a prediction market offers an "event contract" on the same outcome. Critics view the distinction as little more than a loophole, and state authorities across the country are currently pursuing lawsuits against companies like Kalshi, alleging violations of state gambling laws.
The courts have delivered contradictory verdicts. A federal court in Tennessee sided with Kalshi in February 2026, granting a preliminary injunction and finding that sports event contracts are likely swaps subject to exclusive federal jurisdiction, even as state regulators in Nevada, Massachusetts, and Tennessee pressed forward with enforcement actions. In Massachusetts, the state sued Kalshi in September 2025 alleging the platform was evading sports gambling laws, and the Superior Court found that Kalshi's contracts functioned as illegal sports wagering, granting an injunction set to take effect on 8 March 2026. Legal experts have told Front Office Sports that the patchwork of conflicting decisions means the issue will ultimately reach the US Supreme Court.
Mulvaney's argument rests on a states' rights foundation that resonates with a significant slice of conservative opinion. The current legal framework in the United States gives states the right to decide whether to allow sports betting, and he argues those states have gone through proper legislative processes to arrive at conclusions with the necessary consumer protection infrastructure. His concern about the CFTC's role is pointed: "The CFTC is not set up for this," he says. "I like the CFTC, and I used to work with them very closely, but they're not set up to protect consumers. They're set up to protect markets."
The platforms, for their part, have a credible counter. Event contracts operate within the CFTC's core derivatives framework and must be listed and traded on CFTC-registered designated contract markets, cleared through a derivative clearing organisation. CFTC Chairman Michael Selig has insisted that prediction markets are properly classified and that his agency has jurisdiction over the sector. The consumer protection concern also has another side: federally regulated exchanges are subject to surveillance, reporting, and anti-manipulation rules that many offshore or unregulated alternatives are not. Discarding that framework in favour of a patchwork of 50 different state regimes could, paradoxically, leave consumers in a more exposed position.
The political dynamics are, to put it plainly, awkward for Mulvaney's campaign. President Trump's son, Donald Trump Jr., is an investor in Polymarket and an adviser to Kalshi, and Trump's social media platform, Truth Social, plans to launch its own prediction-market platform. Mulvaney joins a growing group of prominent Republicans speaking out against the unfettered growth of online prediction markets, including Utah Governor Spencer Cox and former New Jersey Governor Chris Christie. Mulvaney declined to comment on the Trumps, with a person familiar with the matter telling Front Office Sports that both sides have agreed not to "say bad things" about the other in public.
Mulvaney is careful to clarify he is not seeking a ban on prediction markets altogether. He acknowledges broader concerns about issues like insider trading, referencing suspiciously timed trades on Polymarket around Venezuelan political events. Those concerns have some substance: the CFTC's Division of Enforcement recently issued an advisory following public release of two enforcement cases involving misuse of non-public information and fraud with respect to prediction market event contracts. The industry's own surveillance systems caught both cases, but the incidents have added fuel to calls for tighter oversight.
What this debate ultimately reveals is a genuine tension between two legitimate values: the federal interest in consistent, nationally coherent financial regulation and the states' traditional authority to govern gambling within their own borders. As Mulvaney himself has written, innovation does not excuse ignoring the structure of the federal system, and states retain the right to decide whether gambling is permitted within their borders and under what conditions. That is a principled position. So, too, is the platforms' argument that subjecting federally registered exchanges to 50 overlapping and inconsistent state regimes creates legal uncertainty that ultimately harms market participants.
A pragmatic resolution almost certainly requires Congress to clarify the boundary between federal derivatives regulation and state gambling law, rather than leaving the question to a long chain of contradictory court decisions. Mulvaney himself has acknowledged that even a Supreme Court ruling in favour of the platforms would not be the end: "All the Supreme Court is doing is interpreting the law. But if Congress comes in after a Supreme Court decision and passes a law that says prediction markets can't do sports, that trumps the Supreme Court decision." That may well be the most honest assessment of where this fight is headed.