Gary Gensler Files Amicus Brief Against Federal Jurisdiction Over Sports Betting Prediction Markets

Gary Gensler, the former chair of both the Commodity Futures Trading Commission and the Securities and Exchange Commission, entered the national debate over prediction market regulation on June 12 by filing an amicus brief in a federal appeals court case backing Ohio’s legal fight against Kalshi. Gensler argued that the federal government is stretching the 2010 Dodd-Frank Act far beyond its original intent by claiming exclusive jurisdiction over sports-based event contracts.

The case before the Sixth Circuit Court of Appeals centers on whether Kalshi’s sports event contracts qualify as “swaps” under federal commodities law. If they do, the CFTC would have exclusive regulatory authority, and states would be powerless to restrict or license prediction market platforms on their own. If they do not, states retain the ability to apply their gaming laws — potentially shutting down platforms operating without state authorization.

Why Gensler Says Dodd-Frank Doesn’t Apply

Gensler’s argument draws on his direct experience drafting the Dodd-Frank Act after the 2008 financial crisis. He told CNBC after filing the brief that the legislation was built to stabilize complex financial markets and address systemic risk — not to displace state gambling regulation. “Congress did not include sports betting contracts within the statutory Dodd-Frank definition of swap,” Gensler wrote in the filing.

He argued that a swap, properly understood, is a financial instrument designed to hedge economic risk — something a business might use to protect against fluctuations in interest rates or commodity prices. Sports bets, he said, serve no such hedging function. “Sports bets are very rarely, if ever, about hedging,” he wrote. Given the purpose behind the legislation, Gensler contended that the federal agencies now asserting jurisdiction over prediction markets were taking a position Congress never contemplated or authorized.

The Broader Legal Picture

Gensler’s intervention is notable because the sitting CFTC has taken the opposite position. Current CFTC Chairman Michael Selig has argued forcefully that the agency has exclusive authority over federally registered Designated Contract Markets like Kalshi, and the CFTC has now sued eight states — including New York, Wisconsin, Arizona, Illinois, and New Mexico — to prevent them from applying state gaming laws to prediction market platforms.

That creates a direct and highly public split between a former top regulator and the current administration of the same agency. Legal observers note that conflicting court rulings across multiple circuits make Supreme Court review increasingly likely. The eventual ruling could have sweeping implications not just for Kalshi but for every federally registered prediction market, including Robinhood’s prediction markets division and newer entrants like ProphetX.

What This Means for Bettors and the Industry

The stakes in this legal fight extend well beyond corporate licensing questions. If the CFTC prevails, prediction market platforms would operate under a single federal license and would not be required to obtain state gaming approvals. That would dramatically expand their footprint and lower the regulatory costs that currently create friction for market expansion.

If Gensler’s view prevails — and the courts agree that Dodd-Frank never meant to cover sports wagering — then each state where a prediction market operates would become its own regulatory battlefield. Some states might welcome them through formal legislation; others might move aggressively to shut them down, as New Mexico, Wisconsin, and Ohio have attempted to do.

The question of whether prediction markets are fundamentally different from sports betting is now in front of multiple federal courts simultaneously. What emerges from those rulings will define the future structure of sports wagering in America for years to come.