Former CFTC chair Gary Gensler says sports-betting contracts on prediction markets are not swaps. He filed an amicus brief in the Kalshi case, arguing the agency overstepped. The appeals court will decide who regulates these contracts.
Alpha Score of 59 reflects moderate overall profile with strong momentum, moderate value, moderate quality. Based on 3 of 4 signals – score is capped at 90 until remaining data ingests.
Gary Gensler, the former CFTC chairman who helped write the Dodd-Frank rules, told Bloomberg the agency is wrong to call sports-betting contracts swaps. The current CFTC argues those contracts fall under its jurisdiction. Gensler says they are state-regulated sports bets, period.
“To see somebody trying to kind of tuck into that whole thing, wow, the Commodity Futures Trading Commission was given exclusive jurisdiction and preempts the states for sports betting. Nothing could be further from what we were working on,” Gensler said in the interview.
The dispute is playing out in a federal appeals court in Ohio. Prediction market Kalshi is suing the state to block a suit against the company. The CFTC filed an amicus brief in May arguing that federal law preempts state rules on these markets. Gensler filed his own brief Thursday, making the opposite case.
“Congress did not include sports betting contracts within the statutory Dodd-Frank definition of swap,” Gensler wrote. “Such contracts do not fit the CEA’s purpose or the statutory language defining swap, which focus on hedging economic risk. Sports bets are very rarely, if ever, about hedging.”
CFTC Chairman Michael S. Selig said in a May press release that the Ohio district court took “an improperly narrow view of the Commission’s jurisdiction.” He said the agency “will not allow overzealous state governments to undermine the agency’s longstanding authority over these markets.”
The case tests whether prediction markets on sports outcomes are swaps or bets. If the appeals court sides with Gensler, the CFTC loses jurisdiction over a fast-growing product category. A ruling for the agency would cement its authority over event contracts of all kinds.
Oral arguments have not been scheduled.
Prepared with AlphaScala editorial tooling from the source reporting linked above. Indexable analysis may include a cited Alpha Score value. Publishing checks screen each story before release. Educational coverage, not personalized advice.