The Revolving Door Project, a Prospect partner, scrutinizes the executive branch and presidential power. Follow them at therevolvingdoorproject.org.
From 2021 to 2025, Elizabeth Prelogar served as President Biden’s solicitor general, the top litigation job in United States law. Last month, Prelogar filed an amicus brief on behalf of a very different client.
Now in private practice at BigLaw firm Cooley LLP, Prelogar has apparently taken a contract with the Coalition for Prediction Markets, a lobbying group representing Kalshi and several crypto firms, including Coinbase. (The overlap between crypto and prediction markets is significant: Many prediction markets are built on crypto infrastructure, and several major crypto firms are now offering prediction market services.)
Prelogar’s brief for the Sixth Circuit Appeals Court case Kalshi v. Orgel, on behalf of the Coalition for Prediction Markets, argues that states lack the authority to regulate prediction markets as a form of sports gambling. On social media, Coinbase chief legal officer Paul Grewal called it “a masterpiece.”
It’s quite something to see Grewal wrap himself in the pedigree of a senior Biden administration lawyer. Under Biden, the Securities and Exchange Commission’s efforts to regulate crypto made that industry into one of Donald Trump’s biggest bases of financial support, and the most aggressive political spender in the 2024 election. After Trump won, Coinbase announced it would refuse to work with any law firm that hired attorneys out of Biden’s Securities and Exchange Commission. Grewal described the move as ending the “assumption by many government attorneys that they are free and clear to do whatever they want while in office without any consequences once they leave.”
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But today, Prelogar is just one of several former Biden officials arguing on behalf of crypto and its younger brother, the prediction market industry. Sean Patrick Maloney, Biden’s representative to the Organisation for Economic Co-operation and Development (OECD), is the head of the Coalition for Prediction Markets, violating a pledge he made to get confirmed to not take compensation from any crypto company or organization for four years after his tenure. Former Biden deputy chief of staff Curtis Doster is a Kalshi lobbyist. Former Biden White House liaison John Bivona became Kalshi’s first-ever head of government relations this year, and Stephanie Cutter joined Kalshi as a “strategic partner,” the same position Donald Trump Jr. holds with the company.
Prelogar isn’t even the only former Democratic solicitor general representing Kalshi in court. Neal Katyal, Barack Obama’s acting solicitor general who infamously defended Nestlé from liability for child slavery profiteering, represents Kalshi directly in the litigation. He previously represented Kalshi against the Utah, Nevada, Ohio, Maryland, and Connecticut gaming commissions, and is representing them in a concurrent Tennessee case on similar issues.
For political purposes, the mere presence of a former Biden official’s name matters far more than anything else. The Prelogar brief allowed Kalshi’s head of legal counsel Robert DeNault to tweet that gambling law immunity “is not a D versus R issue.” Plausible claims to bipartisanship are the oil that D.C. runs on. Hiring out of the revolving door is a key way to supply it.
Yet all of these hires come out of minor diplomatic posts, the White House’s political office, or the Department of Justice’s litigation desks. In the Tennessee case, Gary Gensler, Biden’s chair of the SEC, wrote an amicus brief coming to the exact opposite conclusion as Prelogar, arguing strenuously that sports gambling is not a commodity swap, and that the Dodd-Frank Act surely did not intend to preempt state gambling laws. In other words, the one group of Democratic officials not cozying up to Kalshi—former financial regulators—are the only ones who actually understand whether Kalshi is violating any laws.
If the purportedly good-faith case for the revolving door between government and industry is to ensure the most qualified experts advise America’s major institutions, then crypto and prediction markets are actively defying that goal. Prelogar, Maloney, Katyal, and others clearly don’t see employment at Kalshi as a chance to bring their technical expertise to an emerging industry, because they don’t have the relevant technical expertise in the first place. What they see is a mercenary opportunity to make some money while biding their time for the next high-powered government job.
TO MOST PEOPLE, AN APP WHERE 90 PERCENT of the bets are on sports sounds like a sports betting app, over which states have clear regulatory authority. Most states limit gambling to those 21 and up, but Kalshi has refused to block younger players from placing bets, and is hiring gambling and vaping lobbyists.
But just as crypto firms claim that their online-first tokens are exempt from traditional financial classifications, prediction markets claim that they are exempt from state gambling laws. To Kalshi, bets on prediction markets are technically swaps, a form of futures contract regulated exclusively by the federal Commodity Futures Trading Commission. Futures originated as a tool for farmers to hedge against the risk of a meager harvest while buying seed months in advance. Wall Street took them up to hedge the risk of macroeconomic downturns when committing to long-dated loans. According to Kalshi, it’s just bringing the insurance function of futures to the masses, not facilitating gambling.
Everyone from D.C. think tanks to John Oliver has laughed at this argument. A baseball game can’t destroy long-dated investment assets the way a poor crop or a recession can, and the teenagers Kalshi preys upon don’t have any long-dated assets to hedge against in the first place. And Kalshi has advertised itself as a way of “betting” on games for years. Its representative to the Coalition for Prediction Markets brags that she has “more than 16 years of experience in gaming and sports betting.”
To settle this dispute, in June 2024 the CFTC proposed declining its jurisdiction over sports and election predictions—the most gambling-like activity on these apps. This would have cleared the legal path for state gaming commissions to take charge. Then Donald Trump won the presidential election, and let the crypto and prediction market industries clean shop at the CFTC as he made $2 billion in crypto. The only commissioner left is Trump appointee Michael Selig, whose prior job was as a corporate lawyer for cryptocurrency and prediction markets.
That hasn’t stopped the states from trying to assert jurisdiction over the sports betting on prediction markets. Which brings us to Prelogar’s “masterpiece” of an amicus brief.
The crux of Prelogar’s brief is a policy warning that letting the states regulate prediction markets would “jeopardize valuable economic activity.” She cites to, of all people, Friedrich Hayek, the Austrian neoliberal whose market-obsessive philosophy was a reaction against the New Deal, the same New Deal whose legacy Biden tried to embrace.
Hayek theorized that when markets set prices instead of governments, they can pool enormous amounts of information from all market participants into one calculation. According to Prelogar, prediction markets apply Hayek’s theory toward anticipating future events. If you get lots of people to put a price on the likelihood of something happening, eventually the one number everyone is feeding into should become almost oracular.
This, according to Prelogar, is the great danger of subjecting Kalshi to 50 different state gambling law regimes. Kalshi would have to operate 50 smaller markets with 50 different structures, instead of one big beautiful market incorporating the whole planet’s worth of information into a single, glittering price in the sky. “Limiting prediction markets to individual States would frustrate this mechanism by creating more homogenous groups of traders,” Prelogar frets.
Hayekian price theory aside, regulators are not supposed to care whether someone follows markets or flips tarot cards to divine the future. They care about protecting the public from unlicensed gambling, not about the viability of a particular business model. This too is how a free market works.
It would help Prelogar’s case if there were real-world examples of people using prediction markets to hedge uninsurable financial risks, as Kalshi claims. Prelogar cites a Spanish soccer team’s bet on Kalshi that hedged against getting kicked into a lower-ranked league, yet she acknowledges that traditional insurers have offered products like these to soccer relegation for years. Her only other example is a New York bar that offered free drinks if the Knicks won Game 1 of the NBA Finals, but hedged on Kalshi by betting against the Knicks. Is this really what we’re putting compulsive gamblers at risk for?
PRELOGAR ALSO TRIES TO DRAW A LINE between sportsbooks and prediction markets. When one bets with a sportsbook, they are playing against the house, but when one bets on a prediction market, they are playing against the other users. Yet states regulate floating poker games where players face one another. Prelogar also writes that gambling laws don’t address relevant concerns to prediction markets, since they “largely seek to balance two countervailing goals: (1) restricting supposedly immoral behavior, and (2) promoting local economic development,” according to Prelogar. Yet gambling laws could certainly designate market manipulation through insider trading, which prediction market CEOs infamously encourage as yet more data, as immoral behavior.
These arguments are weak because the affirmative case for unregulated prediction markets is weak. The amicus brief doesn’t indicate that Prelogar is a bad lawyer. It indicates that she is happy to lend her prodigious skills to nonsensical claims by wannabe card sharks out to hook a generation on one of the most destructive vices there is.
States that legalized sports betting are seeing skyrocketing addition rates and plummeting consumer credit. Kalshi wants to extend these public-health and economic disasters to the rest of the country. We should not assume that a former U.S. solicitor general is a fool; she knows what she’s doing, and what the consequences would be if she wins. She just values a paycheck more.
