Kalshi’s Robert DeNault and prediction market critic Mick Mulvaney agreed on the industry’s potential value but remained divided over sports contracts, consumer protections and state authority
A Kalshi enforcement official and one of the prediction market industry’s most prominent critics found surprising common ground Wednesday during a Council on Foreign Relations (CFR) roundtable, agreeing that prediction markets can provide legitimate value for forecasting, hedging and information discovery while continuing to clash over sports event contracts.
The CFT hosted the “Prediction Markets and the Public Interest” roundtable. The CFR is an influential, nonpartisan foreign policy think tank and publisher of Foreign Affairs. It brought together Kalshi Head of Enforcement Robert DeNault and former acting White House chief of staff Mick Mulvaney, executive director of Gambling is Not Investing, a coalition advocating for state and tribal gambling laws to regulate sports event contracts.
The two men, who said they had not previously met, remained cordial throughout the discussion despite their disagreement over sports contracts. Asked whether prediction markets create public value, DeNault argued they have emerged as decision-making tools that can counter misinformation, help businesses hedge risk and improve forecasting.
“We’ve seen a use case for prediction markets where they cut through the noise and allow users, both traders and people just using them in order to make decisions or as informational tools, to understand the world around them,” DeNault said.
Rather than challenging that premise, Mulvaney said he agreed with much of DeNault’s assessment.
“I actually don’t disagree with all of that,” Mulvaney said. “I think there’s value in what these folks do.”
He later added that prediction markets are “a legitimate tool” and said, “I believe in the wisdom of crowds.”
Sports contracts remain the dividing line
That common ground largely disappeared when the discussion turned to sports event contracts. Mulvaney said his group’s disagreement with Kalshi centers primarily on sports trading rather than prediction markets more broadly.
“Really, what we’re focused on in our group is the overlap between the prediction markets and sports gambling,” he said.
Mulvaney argued that a transaction tied to a game result remains sports gambling even when it is offered through a federally regulated exchange. He illustrated the point by describing two people taking opposite sides on whether the Yankees would win, then questioned why placing Kalshi between them would change the nature of the transaction.
DeNault pushed back on that reasoning. He argued that many familiar financial products could be described as gambling if the mere existence of opposing positions on an uncertain outcome were enough to define them that way.
“If there is a trade between two parties — if this happens, I get the money, If this happens, you get the money — that defines most swaps, most trades, most insurance contracts,” DeNault said. “So then the definition of gambling is limitless.”
Kalshi maintains CFTC regulation
The exchange captured the central divide between Kalshi and Gambling is Not Investing. Kalshi maintains that its sports contracts are federally regulated derivatives listed on a Commodity Futures Trading Commission-approved exchange. Mulvaney’s group argues that contracts based on sporting events are functionally sports wagers and should remain subject to state gambling laws.
Mulvaney said the dispute is not simply about whether prediction markets can produce useful information. It is about whether federal oversight of an exchange can displace states’ traditional authority over sports gambling.
DeNault argued that Kalshi’s sports contracts operate within the same federal regulatory and compliance structure as its contracts tied to elections, economics and other events. For Kalshi, he said, the fact that a contract references a sporting event does not by itself remove it from the derivatives framework.
Kalshi says it screens markets for national security risks
The roundtable’s audience included representatives from hedge funds, banks, venture capital firms and policy organizations, with questions coming from participants affiliated with Symmetry Investments, Morgan Stanley, Brookings Institution, Commonweal Ventures and the Coalition for Prediction Markets.
The discussion also moved into territory more closely aligned with CFR’s foreign policy focus, including whether prediction markets could create national security risks by rewarding people with access to sensitive information.
Mulvaney raised reports that foreign intelligence services may monitor prediction markets for signs that traders possess inside knowledge, comparing that activity to the longstanding practice of watching indicators such as increased pizza deliveries near the Pentagon.
DeNault said Kalshi now evaluates proposed contracts for risks beyond ordinary market manipulation.
“We’ve implemented recently a risk scoring framework that takes into account national security risks for all contracts that are going live on the platform,” DeNault said.
He said that review has led Kalshi to draw limits around certain military-related markets.
“We don’t want to be listing contracts that relate to kinetic military activity to the extent we can avoid that,” DeNault said.
DeNault said the company’s approach predates the new framework.
“As an exchange, it has always been our position not to list contracts like strike markets or that directly turn on physical violence or a military activity taking place,” he said.
Addiction and marketing draw scrutiny
The public interest discussion also brought pointed questions about whether prediction-market platforms are doing enough to protect consumers as they expand.
Author and technology investor Esther Dyson said addiction may be the industry’s most direct consumer-facing consequence. DeNault said Kalshi has added loss monitoring, deposit limits and a system allowing users to exclude themselves across participating platforms.
“We have the first nationwide self-exclusion program,” DeNault said. “So if a user self-excludes from our prediction market, it counts as a universal self-exclusion from other prediction markets using an integrity vendor that we partner with.”
Mulvaney highlighted one difference between Kalshi and state-regulated sportsbooks that could expose younger customers to sports trading.
“Most states, sports betting is 21. For the CFTC, it’s 18,” Mulvaney said.
DeNault said Kalshi bars customers between 18 and 21 from using credit cards. It also applies additional account monitoring, while arguing that addiction risks are not limited to any one age group or type of financial platform.
Later, Jonathan D. Cohen, sports betting policy lead at the American Institute for Boys and Men, challenged DeNault over past Kalshi advertisements that used gambling language or portrayed the platform as a way to quickly make money.
DeNault acknowledged that prediction-market companies had not always exercised enough restraint as they pursued rapid expansion.
“Young companies often rush and get out ads and start to focus on growth at all costs,” DeNault said.
DeNault said Kalshi has since adopted marketing and affiliate guidelines and removed some earlier ads.
“We’ve taken a lot of steps to ensure that the ads that we’re airing are compliant, that they meet our responsible marketing framework,” DeNault said.
States’ rights argument draws political challenge
Mulvaney’s defense of state authority over sports contracts prompted Aaron Klein of the Brookings Institution to invoke states’ rights, a longtime conservative rallying cry, and press him on why Republicans sometimes favor federal intervention instead.
Klein pointed to two examples of Republican administrations overriding state objections: President Ronald Reagan’s push for a nationwide minimum drinking age and the Trump administration’s support for federally regulated sports event contracts. He asked Mulvaney why conservative Republicans favor state authority in some cases but federal power in others.
“I didn’t like the decision on the drinking age,” Mulvaney said. “I always thought that they abused the interstate Commerce Clause, which Republicans hate until they decide they want to do something with it.”
Mulvaney added, “I don’t think [the states’ rights question] falls neatly into party lines anymore.”
Mulvaney later predicted that Congress is unlikely to settle the sports-contract dispute, leaving the courts to resolve conflicting interpretations of the Commodity Exchange Act. He said differing appellate rulings could force the Supreme Court to decide whether federal law clearly gives the CFTC authority to regulate sports event contracts nationwide despite conflicting state gambling laws.
Mulvaney said Congress could expressly grant the CFTC that authority. Without such clear authorization, he argued, courts should defer to the states.
“Short of that, we’re going to respect the historical role of the state when it comes to gambling,” Mulvaney said.
