Former CFTC and SEC chair Gary Gensler filed an amicus brief with the Sixth Circuit arguing that sports-event prediction markets are not swaps under Dodd-Frank, directly contradicting the CFTC’s own position in the KalshiEX v. Ohio appeal.
Gary Gensler, the former chair of both the CFTC and the SEC, filed an amicus brief Thursday with the Sixth Circuit Court of Appeals arguing that sports-event prediction markets are not federally regulated swaps under Dodd-Frank. The brief sides with state regulators against Kalshi, one of the largest prediction-market platforms, in the latest round of the federal-versus-state jurisdiction battle over prediction markets.
Gensler filed the brief in KalshiEX LLC v. Matthew Schuler, a case Kalshi brought in October to block Ohio regulators from enforcing the state’s gambling laws against it. Chief Judge Sarah Morrison of the US District Court for the Southern District of Ohio denied Kalshi’s request for a preliminary injunction in March, and the company appealed to the Sixth Circuit.
The fight turns on whether sports-event contracts qualify as swaps, which fall under the CFTC’s exclusive jurisdiction. If they do, state gambling laws cannot reach them. Courts have split on the question, raising the prospect of Supreme Court review of a market that, by the CFTC’s own count, saw trading volume across registered prediction markets exceed $25 billion in 2025.
Gensler Breaks With the Agency He Led
The filing puts Gensler at odds with the CFTC. The Commission filed its own amicus brief in the same case on May 12, asserting exclusive jurisdiction over prediction markets and arguing that states cannot treat swaps traded on a designated contract market as illegal gambling. Gensler’s brief counters that sports-event contracts fall outside the statutory definition of a swap, which he argues centers on hedging economic risk.
Gensler led the CFTC’s implementation of Dodd-Frank as chair from 2009 to 2014 and helped draft the law’s swap provisions. His brief argues that Congress never intended Dodd-Frank to displace state authority over sports betting. Reading the swap definition to cover sports bets, he writes, would mean every off-exchange wager placed since October 2012 has been illegal, a result he says no one in Congress or the courts contemplated.
A Multi-Front Legal Battle
The Sixth Circuit case is one of several moving through the courts at once. The Third Circuit ruled in April that New Jersey could not shut down Kalshi’s prediction markets, the first federal appeals court to hold that the Commodity Exchange Act preempts state gambling laws for sports-event contracts. A Ninth Circuit panel hearing Nevada’s cases against Kalshi, Crypto.com and Robinhood appeared more receptive to the states’ arguments at an April hearing.
The CFTC has gone on the offensive against the states, suing Wisconsin and Rhode Island to block enforcement. Separately, the New York Attorney General sued Coinbase and Gemini over unlicensed prediction-market activity.
The Special Rule Question
The CFTC published a notice of proposed rulemaking on event contracts in the Federal Register on June 10, proposing a framework to determine whether contracts involve enumerated activities such as gaming and are contrary to the public interest. Gensler filed his brief the following day.
That rulemaking rests on Dodd-Frank’s “Special Rule,” which Gensler’s brief addresses directly. He argues the rule does not define gaming contracts as swaps but instead gives the CFTC authority to bar regulated exchanges from listing them. That reading, if adopted, would cut against Kalshi’s claim that Congress placed sports betting under exclusive federal jurisdiction.
