Former SEC Chair Gensler Opposes CFTC's Claimed Jurisdiction Over Sports Prediction Markets

Odaily reports that former U.S. SEC Chair and former CFTC Chair Gary Gensler stated in an amicus brief filed with the U.S. Court of Appeals for the Sixth Circuit that the Dodd-Frank Act does not grant the CFTC the authority to regulate sports betting.

This position directly contradicts the claims of current CFTC Chair Michael Selig and prediction market platform Kalshi, who argue that contracts related to sporting events fall under federal regulatory purview, not state gambling authorities.

Gensler pointed out that if the Dodd-Frank Act had truly preempted state authority over sports betting, it would have been major news at the time, but no one understood it that way. He served as CFTC Chair from 2009 to 2014 and was responsible for implementing the relevant rules of the Dodd-Frank Act.

The amicus brief relates to a lawsuit between Kalshi and the state of Ohio. Ohio's gambling regulator demanded that Kalshi stop offering contracts related to sporting events to state residents. Kalshi subsequently sued the state, but its request for a preliminary injunction was denied by the court. The CFTC supports Kalshi, arguing that Ohio exceeded its authority.

Over the past year, the CFTC has persistently attempted to expand its regulatory claims over prediction markets and has sued several states to establish its jurisdiction. This week, the agency also proposed broader rules for prediction markets, generally still supporting sports-related contracts but intending to impose stricter restrictions on bets concerning events like terrorist attacks, assassinations, and wars.