Gary Gensler, a former chairman of both the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), has formally challenged the assertion by the current CFTC chairman that the agency possesses jurisdiction over prediction markets and event contracts tied to sporting events. This intervention comes through an amicus brief filed with the U.S. Court of Appeals for the Sixth Circuit.
Key Takeaways
- Gary Gensler, in an amicus brief, argued that the Dodd-Frank Act does not grant the CFTC authority over sports wagering.
- This stance directly opposes the position of current CFTC Chair Michael Selig and prediction market platform Kalshi.
- The case involves Kalshi’s lawsuit against the state of Ohio after being ordered to cease offering sports-related event contracts.
- Gensler previously led both the CFTC and the SEC, bringing significant experience in financial regulation.
- The brief highlights the ongoing debate regarding regulatory authority over emerging financial products and the potential impact on the broader crypto and financial markets.
In the brief, Gensler contended that the Dodd-Frank Act, a comprehensive financial reform law enacted following the 2008 financial crisis, did not confer authority to the CFTC over sports wagering. This position stands in direct contrast to that of current CFTC Chair Michael Selig, as well as the prediction market platform Kalshi, both of whom maintain that such contracts fall under federal jurisdiction. Gensler pointed out that if Dodd-Frank had preempted state authority on sports betting, it would have been a significant and widely reported aspect of the legislation at the time, which he states was not the case.
Gensler’s regulatory background is extensive. He previously served as SEC Chair from 2021 to 2025, where he notably characterized most cryptocurrencies as securities and initiated numerous enforcement actions against major crypto firms like Coinbase and Kraken. Prior to his SEC tenure, he chaired the CFTC from 2009 to 2014, overseeing the implementation of Dodd-Frank rules. This dual experience provides a unique perspective on the boundaries of financial regulatory authority.
The amicus brief was submitted in connection with a case involving Kalshi. The prediction market platform initiated a lawsuit against the state of Ohio in October 2025 after the Ohio Casino Control Commission directed the platform to cease offering sports-related event contracts to its residents. A lower court subsequently denied Kalshi’s request for a preliminary injunction. The CFTC, under Chair Selig, has publicly supported Kalshi in this dispute, arguing that Ohio’s actions exceed its jurisdictional limits.
Over the past year, Chair Selig has actively sought to assert CFTC jurisdiction by proposing rules for prediction markets. Selig has argued that the CFTC possesses a broad statutory mandate, notwithstanding objections from state regulators who contend that these platforms violate local gaming and gambling laws, particularly concerning sports-related bets. The CFTC has pursued legal action against several states in its effort to establish oversight over prediction markets.
This past week, the CFTC also proposed broad rulemaking for the prediction market sector. While these rules would reportedly still allow for overall support for sports betting, they face opposition from state regulators. The proposed framework indicates a more restrictive approach to bets concerning terrorism, assassinations, and war.
Gensler further questioned the CFTC’s capacity to effectively oversee prediction markets, citing the agency’s funding limitations. The CFTC has historically faced challenges with its budget, with its sister agency, the SEC, possessing a significantly larger staff and budget. Former CFTC Chair Rostin Behnam and Brian Quintenz, a former commissioner and Trump’s nominee to lead the agency, have both previously advocated for increased CFTC funding.
In his brief, Gensler stated that the CFTC did not seek additional funding to regulate sports betting and, in his view, “lacks the experience to do so.”
Potential Regulatory Precedent
Gary Gensler’s amicus brief represents a significant development in the ongoing jurisdictional battles within U.S. financial regulation, particularly concerning novel financial products like prediction markets. By directly challenging the CFTC’s asserted authority over sports-related event contracts, Gensler is raising fundamental questions about the scope of the Dodd-Frank Act and the interpretation of federal regulatory powers. If the Sixth Circuit or higher courts were to adopt Gensler’s reasoning, it could set a precedent that limits the CFTC’s reach into areas historically regulated by states or not explicitly defined as commodities. This could have far-reaching implications for platforms offering event contracts, potentially requiring them to navigate a more fragmented regulatory landscape. Conversely, if the CFTC’s position prevails, it would solidify its authority over a broader range of derivative-like contracts, potentially influencing how similar instruments are regulated globally and setting a standard for how existing financial legislation is applied to emerging markets, including cryptocurrencies and decentralized finance (DeFi).
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