Gary Gensler Argues Federal Law Does Not Allow CFTC to Oversee Sports Prediction Markets
Former CFTC and SEC Chair Gary Gensler filed an amicus brief with the Sixth Circuit Court of Appeals arguing that the CFTC lacks authority under federal law to oversee sports-related prediction markets. Gensler, along with the Indian Gaming Association, American Gaming Association, and Better Markets, contends that these contracts violate state gaming regulations. The case stems from a preemptive lawsuit by KalshiEx against Ohio. Gensler's brief emphasizes that sports betting contracts do not meet the definition of swaps under the Dodd-Frank Act, as they are not used for hedging economic risks. Courts are divided on whether prediction markets are federally regulated swaps or state-regulated gambling. The outcome could impact state tax revenues and industry compliance, with potential Supreme Court involvement.
Key facts
- Gensler filed amicus brief arguing CFTC lacks authority over sports prediction markets.
- Sports betting contracts do not meet Dodd-Frank swap definition, says Gensler.
- KalshiEx preemptively sued Ohio; federal judge ruled against Kalshi in March.
- Courts split on whether prediction markets are swaps or state-regulated gambling.
- Supreme Court may ultimately decide the issue; Congress is also examining it.