Gary Gensler Returns With a New Front in America’s Regulatory Wars

Former SEC and CFTC chair Gary Gensler has entered the legal war over sports prediction markets, backing Ohio against Kalshi in the Sixth Circuit Court of Appeals.

He is an unusual amicus. Gensler helped negotiate the 2010 Dodd-Frank Act, the very statute Kalshi says puts its sports contracts under exclusive federal control.

Why Gary Gensler Says Dodd-Frank Was Never a Betting Law

Gensler filed his amicus brief on June 11 in KalshiEX v. Schuler. Tribal gaming interests filed in support of Ohio as well, while the American Gaming Association submitted its own brief and Better Markets urged the court to affirm.

Kalshi is appealing after Chief Judge Sarah Morrison ruled in March that its sports contracts are likely not swaps.

However, the platform won a similar challenge in the Third Circuit, and a Tennessee judge sided with Kalshi in February.

Gensler chaired the CFTC from 2009 to 2014 and helped shape Dodd-Frank’s derivatives rules after the 2008 crash.

He insists nobody who drafted the law contemplated sports betting.

“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,” Gensler made the remarks in a CNBC interview.

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His brief argues nobody slipped nationwide betting past the late Senate Majority Leader Harry Reid, who chaired the Nevada Gaming Commission before entering the Senate.

Preempting a $165 billion per year industry, it adds, is not something Congress hides inside a definition.

The brief also notes the CFTC voted unanimously in 2011 to bar contracts involving gaming, war, and assassination.

The agency’s new proposal would rewrite that rule.

States and Tribes Challenge Federal Control of Prediction Markets

Thirty Native American tribes and 11 tribal associations also backed Ohio, gaming attorney Daniel Wallach indicated.

He noted that Kalshi grounds its jurisdiction claim in statutes dating to 1974, potentially triggering the major questions doctrine.

Meanwhile, Minnesota banned prediction markets outright, making operation a felony from August 1.

The CFTC and DOJ have sued six states to defend exclusive federal jurisdiction, extending a federal preemption campaign President Donald Trump has publicly backed.

Gensler also opposed the CFTC’s 267-page June 10 proposal allowing most sports outcome contracts while banning injury and officiating wagers.

He argued addiction and consumer protection belong with the states, deepening the federal and state divide.

The stance is striking for a regulator who returned to MIT after leading one of the SEC’s most aggressive crypto enforcement campaigns.

He now sides with states against a CFTC-blessed market.

If the Sixth Circuit affirms, the clash with the Third Circuit could invite Supreme Court review.

The ruling may settle whether prediction markets answer to Washington or the states.

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