Summary
- Gary Gensler, known for his strict regulatory stance on crypto, has allied with states contesting the prediction market industry endorsed by the CFTC.
- He emphasized that issues concerning gambling and addiction should remain under state jurisdiction.
- The ongoing legal disputes involve various states, tribes, gaming organizations, and state regulators challenging Kalshi's assertion of exclusive federal authority.
Gary Gensler, the former chair of the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC), submitted an amicus brief to the Sixth Circuit Court of Appeals on Thursday, arguing that when Congress enacted the Dodd-Frank Act in 2010, it did not grant the CFTC control over nationwide sports betting, thereby upholding state gaming laws.
According to gaming lawyer and prediction market authority Daniel Wallach, "Thirty Native American tribes and 11 tribal associations have filed an amicus curiae brief in support of Ohio in the Sixth Circuit prediction markets appeal," referring to Kalshi's appeal following a decision by federal district judge Sarah Morrison, who denied the company's request for a preliminary injunction against state cease-and-desist orders.
30 Native American Tribes and 11 tribal associations have filed an amicus curiae brief in support of Ohio in the Sixth Circuit prediction markets appeal filed by Kalshi after it was denied a preliminary injunction by federal district court judge Sarah Morrison. pic.twitter.com/MlMofmMdY5
— Daniel Wallach (@WALLACHLEGAL) June 12, 2026
Gensler's brief aligns with other supporters of Ohio, including the Indian Gaming Association, the American Gaming Association, and Better Markets. The Utah Attorney General, representing a state with a complete ban on sports betting, joined Nevada in signing the brief.
As the SEC chair, Gensler led an extensive enforcement initiative in the crypto sector, initiating about 100 actions and labeling the industry as "a field that was built up around noncompliance" before his departure.
Now, he is advocating for states against a market sanctioned by the CFTC.
The case revolves around the Dodd-Frank Wall Street Reform and Consumer Protection Act, a 2010 law designed to regulate swaps and mitigate risky derivatives following the 2008 financial crisis.
Gensler, who chaired the CFTC from 2009 to 2014 and was instrumental in its creation, stated that the law was intended to address the financial crisis, not to permit sports betting.
He remarked, "Millions of people were out of work. Millions of people had lost their homes," in a CNBC interview discussing the legislation that focused on credit-default and interest-rate swaps.
Gensler further noted, "I testified in Congress 54 times, and literally Republicans and Democrats alike, nobody said, oh, you know what? Gensler, I think we should give your small agency under President Obama authority to regulate sports betting.”
The brief also indicates that no one involved in drafting Dodd-Frank intended to create a national sports betting system. It cites the court's assertion that Congress does not "hide elephants in mouseholes," arguing that preempting a $165-billion-a-year industry would not be discreetly included in "a subpart of a definition."
Additionally, Gensler opposed the CFTC's recent 267-page proposal, which would permit betting on sports outcomes but ban contracts related to war, assassination, and specific injury- or referee-related wagers.
When asked if the proposal was a positive development, Gensler replied, "No, no," asserting that the agency is attempting to overturn a rule the CFTC unanimously approved around 2011 that prohibited contracts on "assassination, war, terrorism, gaming or unlawful acts."
Highlighting the CFTC's reduced workforce and concerns regarding youth gambling and addiction, Gensler argued that such matters are best managed at the state level, stating, "Let the states do it."
State Challenges to Prediction Markets
Currently, 16 states are engaged in legal battles with prediction market platforms, with Minnesota outright banning them by criminalizing their operation and advertising. The CFTC has taken the unusual step of suing six states to defend its claim of exclusive jurisdiction.
President Donald Trump has endorsed the federal stance, deeming the issue "critically important" and urging regulators to maintain control while states categorize the sector as gambling.
The administration has supported this position in court, with the CFTC and DOJ swiftly suing Minnesota after Governor Tim Walz enacted the state's prediction market ban.
Wallach tweeted that the tribal amici brief underscores the breadth of Kalshi's argument, noting the company's assertion of exclusive federal jurisdiction is based not only on Dodd-Frank but also on the 2000 Commodity Futures Modernization Act and the CFTC Act of 1974.
He remarked that both statutes are sufficiently old to qualify as "long-extant statutes" for the major-questions doctrine, which asserts that courts usually require clear congressional approval for significant extensions of agency authority.
Decrypt has reached out to the CFTC and Kalshi for remarks.