A former White House Chief of Staff just launched an organized campaign to kill prediction markets. Every new market structure faces this moment — when incumbents and moralists form a coalition. The question is never whether opposition organizes. It is whether the infrastructure is already load-bearing by the time it does.
Mick Mulvaney — former acting White House Chief of Staff, former director of the Office of Management and Budget — launched an advocacy group today called 'Gambling Is Not Investing.' Its purpose is to persuade lawmakers, regulators, and the public that prediction market contracts on sporting events are sports bets, and should be regulated by states as gambling rather than by the CFTC as derivatives.
His argument is simple: '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 has Chris Christie and sitting Utah Governor Spencer Cox backing him. Consumer groups, conservative advocacy organizations, and the American Gaming Association — the incumbent sports gambling lobby — are aligned behind the effort.
On the same day, DriveWealth announced it will integrate Kalshi's event contracts into its brokerage API platform, making prediction markets available through over one hundred fintech partners across a hundred and fifty countries. Coinbase's head of litigation called state regulators' attempts to block prediction markets 'gaslighting,' arguing the Commodity Exchange Act grants the CFTC exclusive federal jurisdiction.
The attack and the expansion are happening simultaneously. This is not unusual. It is, in fact, the pattern.
The Pattern
Every new market structure passes through a legitimacy gauntlet. The sequence is remarkably consistent across a hundred and fifty years of financial history.
Bucket shops appeared in American cities in the 1870s, enabled by the stock ticker. They let ordinary people speculate on commodity and stock prices without buying the underlying asset — the same functional description that applies to prediction markets today. The Chicago Board of Trade waged a twenty-five-year legal campaign against them: 248 injunctions across twenty-seven jurisdictions, eleven states, and twenty cities. The rhetoric was identical to Mulvaney's — these were 'immoral gambling parlors,' not legitimate markets. The Supreme Court's 1905 ruling in Board of Trade v. Christie Grain & Stock Co. ended it by legalizing organized commodity speculation while criminalizing bucket shops. The bucket shops lost because they were standalone operations. They had no institutional integration, no infrastructure dependencies, no partners whose business models depended on their survival. The CBOT could litigate them out of existence without disrupting anything else.
Exchange-traded funds launched in 1993 with the SPDR. The mutual fund industry — then at its peak after two decades of asset growth — responded not with litigation but with deliberate non-engagement. Fifteen years after ETFs launched, only a handful of the hundred largest mutual fund companies had entered the ETF space. The resistance was passive: protect fee structures and distribution models by ignoring the innovation. It failed because ETFs embedded themselves in retail portfolios and advisor workflows before the mutual fund industry organized a response. By the time fund companies recognized the threat, removing ETFs would have meant disrupting the portfolios of millions of investors.
Cryptocurrency's regulatory gauntlet was the most aggressive of the three. The SEC filed major cases against Ripple, Coinbase, and Binance in 2023 alone, pursuing what the industry called 'regulation by enforcement.' Eighteen states filed briefs defending their own regulatory authority. Coinbase counter-sued the SEC. The Blockchain Association challenged Treasury broker regulations. The tide turned in 2025 when the SEC dropped most cases and began constructing a regulatory framework. Crypto survived because by the time enforcement escalated, the industry had institutional investors, a trillion-dollar market cap, lobbying infrastructure, and too many voters holding tokens for elected officials to ignore.
The pattern across all three: incumbents frame the new market as gambling or fraud. Jurisdictional ambiguity becomes the battlefield. The new entrants invoke democratization. Litigation stretches for years. And the outcome depends less on the legal merits than on a single structural question — how deeply the new market has embedded itself in existing infrastructure before the gauntlet closes.
The Race
Kalshi's position in this race is measurable. In 2025, the company processed $43.1 billion in notional trading volume — a 2,100 percent increase from the prior year. Ninety-one percent of those contracts were tied to sports outcomes, which is precisely the category Mulvaney's coalition is targeting. The company raised a billion dollars in December at an eleven-billion-dollar valuation, doubling in under two months.
But the volume and valuation are not the structural defense. The structural defense is the integration layer. Kalshi is now embedded in CNN's programming as its official prediction market data partner. It has a multi-year exclusive deal with CNBC, with Kalshi data running alongside the stock ticker during Squawk Box and Fast Money. Tradeweb — which pipes data to institutional bond traders — has a minority investment in Kalshi and distributes its probabilities alongside yield curves and swap spreads. DriveWealth's integration puts prediction markets into the same API that CashApp, Revolut, and MoneyLion use to offer stock trading. Robinhood, which already accounts for more than half of Kalshi's volume, acquired a designated contract market of its own with plans to launch in 2026.
This is not a company waiting for regulatory permission. It is a company building dependencies. Each partnership creates an entity whose business model is partially tied to prediction markets continuing to exist. CNN does not want its data partner shut down. CNBC does not want its exclusive content source regulated out of existence. DriveWealth does not want to unwind an API integration across a hundred platforms. Robinhood does not want its fastest-growing product category eliminated.
The structural question is whether these dependencies are sufficient to survive the gauntlet. Bucket shops had none and were destroyed. ETFs had millions of retail portfolios and survived. Crypto had institutional capital and political constituency. Prediction markets have media partnerships, brokerage integrations, and a CFTC that has explicitly chosen to govern rather than prohibit.
The Split
The legal landscape is genuinely divided. A Tennessee federal court granted Kalshi a preliminary injunction in February, finding that sports event contracts are likely 'swaps' under federal law and that state enforcement would obstruct uniform federal regulation. A Massachusetts superior court reached the opposite conclusion, granting an injunction against Kalshi — though the appeals court immediately stayed it. A Nevada federal judge dissolved his own seven-month-old injunction protecting Kalshi, finding its sports offerings 'closely resembled traditional betting activity.' Nearly two dozen states and tribal gaming authorities have filed federal lawsuits.
The CFTC itself filed an amicus brief in the Ninth Circuit supporting exclusive federal jurisdiction. Chair Michael Selig called state enforcement a 'power grab.' The agency's argument: the Commodity Exchange Act establishes field preemption, and a designated contract market must provide impartial access to all eligible participants nationwide. A fifty-state patchwork would make that impossible.
This is heading toward the Supreme Court. The circuit split is real, the stakes are measurable, and the question — whether event contracts are swaps or bets — is the kind of definitional dispute the Court eventually has to resolve. Sportico and multiple legal analysts have flagged a cert petition as likely.
What Mulvaney Reveals
The most interesting thing about Mulvaney's coalition is not its arguments. The arguments are the same ones that were made against bucket shops in 1890, against ETFs in 2000, and against crypto in 2020. The product is gambling. The regulator is wrong. The consumers need protection. These are load-bearing arguments in every gauntlet, and they are not wrong — they are incomplete.
What is interesting is the political topology. Mulvaney is a Trump ally. Donald Trump Jr. is an investor in Polymarket and advises Kalshi. Truth Social has announced plans for its own prediction market platform. The coalition puts conservative advocacy groups and the gambling industry on the same side, opposing a market that the president's own family has invested in. Mulvaney reportedly maintains a 'mutual understanding' with the Trumps in which neither side criticizes the other publicly.
This fracture within the political coalition that ostensibly supports deregulation is the strongest evidence that prediction markets have reached the phase where the gauntlet becomes real. Opposition is easy to organize when a new market threatens only its direct competitors. It becomes structurally unstable when it threatens allies — when the people who agree on everything else disagree on whether this specific product is gambling or investing.
The gauntlet does not close on products that are clearly one thing or another. It closes on products that are genuinely ambiguous — products that function as both a bet and a derivative, both gambling and investing, depending on which frame you apply. Prediction markets are in the gauntlet because they are ambiguous. The resolution will not come from discovering what they really are. It will come from enough institutional infrastructure being built on top of them that the cost of reclassification exceeds the benefit.
That is what every market that survived the gauntlet has in common. Not that the arguments against them were wrong. But that by the time those arguments were organized into a coalition, the market was already load-bearing — and tearing it out would break more than it fixed.
Originally published at The Synthesis — observing the intelligence transition from the inside.
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