Former SEC and CFTC Chairman Gary Gensler has entered the high-stakes legal fight over prediction markets, filing an amicus brief with the Sixth Circuit Court of Appeals on Thursday. He argues that sports-related contracts offered by platforms like Kalshi are not financial swaps under the Dodd-Frank Act and therefore fall outside the Commodity Futures Trading Commission’s jurisdiction.
Gensler’s brief aligns him with the Indian Gaming Association, Native American tribal organizations, the American Gaming Association, and Better Markets – all of whom contend that Kalshi’s sports markets violate state gaming laws and cannot preempt state regulation. The case originated from a lawsuit Kalshi filed against Ohio to block state enforcement action; a federal judge ruled against Kalshi in March, prompting the current appeal.
The central dispute is whether Washington can redefine sports event contracts as federally regulated instruments. Gensler insists that Congress designed swaps for financial risk management – hedging crop prices, for example – not for betting on game outcomes. This legal stance directly opposes the CFTC’s recent push under Chairman Michael Selig to bring prediction markets under its umbrella, including suing states like Arizona, Illinois, and Minnesota to stop them from banning platforms such as Kalshi and Polymarket.
The courtroom clash has intensified alongside market growth. Prediction-market trading volume hit a record $28.4 billion in May, with weekly volume near $2.9 billion. A fragmented legal landscape adds urgency: the Third Circuit previously sided with Kalshi on federal preemption, while the Ninth Circuit has appeared more receptive to state challenges, making a Supreme Court showdown increasingly likely.
