Former Commodity Futures Trading Commission Chairman Gary Gensler is urging a federal appeals court to side with Ohio regulators in their fight with prediction-market company Kalshi, arguing that Congress never turned the CFTC into a nationwide sports betting regulator when it passed the Dodd-Frank Act.
In a friend-of-the-court brief filed Thursday (June 11) with the U.S. Court of Appeals for the Sixth Circuit, Gensler challenged Kalshi’s position that certain event contracts fall under federal commodities law in a way that limits state oversight of sports wagering.
“This case boils down to the question of what, if anything, Congress did in Dodd-Frank with regard to sports betting,” Gensler wrote. “The answer—from someone who was there—is that Congress did nothing of the sort.”
The filing comes as Kalshi continues to battle Ohio authorities over its sports-related event contracts. The dispute follows earlier legal clashes in the state, including a ruling in which an Ohio judge rejected Kalshi’s request for injunctive relief and separate proceedings involving a proposed $5 million state penalty. The conflict has become part of a growing national debate over whether prediction markets fall under federal commodities regulation or state gambling laws.
Why Gensler says Congress never intended a federal sports betting regime in Kalshi case
Gensler, who led the CFTC from 2009 through 2014 before later becoming chair of the Securities and Exchange Commission, told the court that Dodd-Frank was designed to address risks exposed by the 2008 financial crisis. According to the brief, lawmakers focused on swaps and other derivatives markets, not sports wagering.
The filing traces the history of commodity regulation and argues that federal derivatives laws have traditionally centered on hedging risk and aiding price discovery.
“Sports bets are very rarely, if ever, about hedging,” Gensler wrote.
A major part of the brief focuses on congressional intent. Gensler argued that lawmakers never discussed shifting authority over sports betting from states to federal regulators. He highlighted the influence of former Senate Majority Leader Harry Reid of Nevada.
“To put the argument in the plainest real-world terms: Senate Majority Leader Harry Reid of Nevada would never have consented to or passively accepted legislation displacing an activity so critical to his state’s economy and politics,” the brief states.
Gensler also said there was no indication during Dodd-Frank’s drafting or implementation that the CFTC would become a national sports betting watchdog.
“There was no mention of sports betting during Amicus’s fifty-four times testifying before Congress as CFTC Chairman, nor did anyone involved in drafting Dodd-Frank speak of making the CFTC a national sports-betting regulator,” the filing says.
The brief notes that Congress gave the CFTC authority to block certain event contracts tied to gaming and cites legislative remarks stating such products could amount to gambling. It also points to ongoing litigation in which the CFTC has defended prediction markets against some state lawsuits while broader jurisdictional questions remain unresolved.
Gensler concluded by invoking a familiar legal principle.
“Congress does not ‘hide elephants in mouseholes,’” the brief says.
Outside the prediction-market debate, Gensler is also known for his later tenure at the SEC, where the agency pursued lawsuits against major cryptocurrency firms and figures, including Coinbase, Kraken, Crypto.com, Ripple, and Consensys.
Brian Quintenz, who was at one point President Donald Trump’s top pick for the CFTC chief role, wrote on X: “Gary Gensler deliberately sought an intergalactic reach for the CFTC through Dodd Frank. Now he’s saying that didn’t mean a few things he doesn’t like. The law is the law. Exchange-traded event contracts, on all things, are within the agency’s jurisdiction.”
Featured image: Third Way Think Tank via Flickr / CC BY-NC-ND 2.0
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