Gensler backs states against CFTC in prediction-market fight

Gary Gensler filed an amicus brief late Thursday with the Sixth Circuit Court of Appeals arguing that the Dodd‑Frank Act did not give the Commodity Futures Trading Commission authority to preempt state laws on national sports betting. The filing supports Ohio in an appeal by prediction‑market operator Kalshi and urges that states regulate prediction markets.

Gensler chaired the CFTC from 2009 to 2014 and later led the Securities and Exchange Commission. In the brief he noted he helped negotiate Dodd‑Frank and frequently testified to Congress during its drafting, saying lawmakers did not discuss granting the CFTC authority over sports wagering.

The brief was filed with allied submissions from 30 Native American tribes and 11 tribal associations, the Indian Gaming Association, the American Gaming Association, and advocacy group Better Markets. Nevada joined several other states and the Utah attorney general signed on in a state where sports betting remains illegal.

The filings respond to Kalshi’s challenge after U.S. District Judge Sarah Morrison denied the platform’s request for a preliminary injunction against state cease‑and‑desist orders. Kalshi and other prediction‑market platforms argue the CFTC has exclusive authority over contracts tied to sports outcomes, citing Dodd‑Frank, the Commodity Futures Modernization Act of 2000 and the CFTC Act of 1974.

The CFTC has defended its view of exclusive jurisdiction in court and proposed a 267‑page rule that would allow betting on certain sports outcomes while banning contracts tied to assassination, war, terrorism and some referee‑ or injury‑related wagers. Gensler wrote that the proposal appears to reverse a prior CFTC rule adopted around 2011 that had prohibited contracts on assassination, war and related topics.

The brief invokes the major‑questions doctrine and quotes the judiciary’s warning that Congress does not “hide elephants in mouseholes,” arguing that preempting a large industry would require clear congressional authorization. Gensler also raised concerns about the agency’s capacity to oversee widespread sports wagering and highlighted risks of youth gambling and addiction, concluding in the filing: “Let the states do it.”

Legal action over prediction markets has spread across the country. Sixteen states are in proceedings with platforms; Minnesota enacted a ban that criminalizes operation or advertisement of prediction markets. The CFTC, joined by the Department of Justice, has filed suits against several states asserting federal preemption, and the administration backed the federal position in litigation against states including Illinois, Arizona, Connecticut and Minnesota.

If the Sixth Circuit rules that the CFTC does not have exclusive jurisdiction, state and tribal regulators would retain broader authority to enforce their gaming and gambling laws against prediction‑market operators. The appeal in the Sixth Circuit remains pending.