Former SEC Chair Gary Gensler has filed a legal brief siding with states against federally-regulated prediction markets like Kalshi. In the appeal before the Sixth Circuit Court of Appeals, Gensler argues Congress never authorized the CFTC to oversee nationwide sports wagering through the Dodd-Frank Act. He contends concerns over gambling and addiction should be left to state control.
Former SEC and CFTC chair Gary Gensler has filed an amicus brief supporting Ohio’s challenge to prediction markets. He stated Congress did not grant the CFTC authority over sports betting when it passed the Dodd-Frank Act in 2010.
Gensler filed alongside groups including the Indian Gaming Association and the American Gaming Association. He argued that preempting a $165-billion-a-year industry would not be hidden in a subpart of a definition.
In a CNBC interview, Gensler said, “I testified in Congress 54 times, and literally Republicans and Democrats alike, nobody said, oh, you know what? Gensler, I think we should give your small agency under President Obama authority to regulate sports betting.” He also opposed a new CFTC proposal allowing sports outcome betting.
Citing concerns over youth gambling and addiction, Gensler argued such issues are best handled locally. He said, “Let the states do it.”
Sixteen states are in legal proceedings with prediction market platforms, and Minnesota has banned them outright. The CFTC and DOJ are jointly suing Minnesota to defend federal jurisdiction.
President Donald Trump has called the issue critically important and supports federal control. Gaming attorney Daniel Wallach noted the breadth of the legal argument, which involves 30 Native American tribes and 11 tribal associations filing in support of Ohio.
