Gary Gensler Sides With States Against Kalshi as Prediction Market Regulation Battle Escalates
Former CFTC Chair Gary Gensler filed a Sixth Circuit brief backing Ohio against Kalshi — as current Chair Selig vows to keep suing states. The prediction market jurisdiction fight is heading to the Supreme Court.
While watching the New York Knicks erase a 29-point deficit in Game 4 of the NBA Finals, former U.S. Commodity Futures Trading Commission Chair Gary Gensler pulled up Polymarket to check the odds. At the time he looked, the San Antonio Spurs were trading at 93 cents — a near-certain win in the market's eyes. Then Og Anunoby tipped in the buzzer-beater.
The next morning, Gensler filed a brief with the Sixth Circuit Court of Appeals siding with the state of Ohio against Kalshi, the federally regulated prediction market platform he once helped shape the regulatory environment for.
"Sports betting was not part of the 2008 financial crisis or the response to it," Gensler wrote in his amicus brief. "Nowhere in the Executive Branch's list of priorities, in Amicus's 54 appearances before Congress, in any statement of a member of Congress, or in the text of Dodd-Frank was there any indication Congress sought to revise sports betting regulation."
The filing marks the latest — and most dramatic — escalation in a nationwide legal battle over who controls the fast-growing prediction market industry: the federal CFTC, or the states.
"Sports Bets Are Not Swaps"
Gensler's core argument is straightforward: the Dodd-Frank Act of 2010, which expanded CFTC authority over swaps following the financial crisis, was never intended to make sports wagering a federally regulated financial product.
"These contracts do not have hedgers meeting speculators," Gensler told Bloomberg in an interview published Friday. The legislation was a direct response to the collapse of Lehman Brothers and a runaway multi-trillion dollar swaps market — not an attempt to create a nationwide sports betting framework under CFTC oversight, he said.
Gensler chaired the CFTC from 2009 to 2014, helping write and implement Dodd-Frank. He later served as SEC Chair from 2021 to 2025. He said he has no financial interest in the platforms or the outcome of the case. He decided to file after the topic came up in a class discussion at MIT, where he now teaches.
He also invoked Harry Reid, the late Nevada Senate Majority Leader who was a key Dodd-Frank sponsor. "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 by permitting sports betting only under CFTC auspices," the brief stated.
Kalshi spokesperson Elisabeth Diana pushed back directly: Gensler is "wrong" about what qualifies as a swap under the statute.
A Broad Coalition Against Kalshi
Gensler did not file alone. By Thursday evening, the Sixth Circuit had received amicus briefs from:
- 39 state attorneys general plus Washington D.C., led by Utah Attorney General Derek Brown and Nevada Attorney General Aaron Ford, arguing that Congress did not "sneak sports-gambling preemption into the Dodd-Frank Act"
- 30 Native American tribes and 11 tribal associations, including the Indian Gaming Association and the National Congress of American Indians, arguing that sports event contracts siphon tribal gaming revenue and undermine sovereign rights under the Indian Gaming Regulatory Act (IGRA)
- The American Gaming Association, whose President Bill Miller called the CFTC's proposed framework "a remarkable attempt to redefine what constitutes sports betting" (Reuters, June 10, 2026)
- Better Markets, a financial markets watchdog that has consistently challenged prediction markets' federal exemption claims
The case originates from Kalshi's preemptive lawsuit against Ohio — specifically the Ohio Casino Control Commission and Attorney General Dave Yost — after Ohio threatened to shut down Kalshi's sports event contract operations. Federal District Court Judge Sarah D. Morrison denied Kalshi's motion for a preliminary injunction in March 2026. Kalshi appealed to the Sixth Circuit, and Thursday's wave of amicus filings signals that every major stakeholder in the gambling, sports, and financial industries is now watching closely.
CFTC Chair Selig: "Bring It On"
Current CFTC Chair Michael S. Selig is not backing down. In a wide-ranging interview with Semafor published Friday, Selig made clear the agency intends to keep fighting states that assert jurisdiction over CFTC-licensed exchanges.
"We will continue to litigate against states that are seeking to nullify federal law," Selig said. The CFTC has already sued six states — New York, Illinois, Arizona, Connecticut, Wisconsin, and Minnesota — asserting its exclusive jurisdiction under the Commodity Exchange Act.
When pressed on the battle potentially reaching the Supreme Court, Selig was unequivocal: "We have all the tools we need under our statute."
The agency simultaneously advanced the prediction market industry in a different way on Thursday. The CFTC granted ProphetX — a New York-based operator founded in 2018 — approval to register as both a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), making it the second fully CFTC-licensed prediction market and the first sports-native, direct-clearing platform to receive dual federal licensing.
"This approval positions ProphetX to become the first sports-native direct-clearing prediction market in the United States," said ProphetX CEO and Co-Founder Dean Sisun in a statement published on PR Newswire (June 11, 2026). The company has operated a sweepstakes model in more than 40 states while awaiting CFTC licensure and expects to launch its regulated exchange before the NFL season. Its proprietary "Request for Quote Parlay Mechanism" will allow users to build multi-event combinations directly with counterparties — a feature designed to compete directly with sportsbook parlay products.
The Regulatory Chessboard
The legal landscape across federal circuits is increasingly fragmented:
- Third Circuit (New Jersey): Ruled in April 2026 that New Jersey could not shut down prediction market operations — a significant win for the federal preemption argument and for Kalshi
- Ninth Circuit: A panel has signaled more skepticism toward Kalshi's jurisdictional claims, with California tribes running a parallel challenge
- Sixth Circuit (Ohio): The current primary battleground; the district court already ruled against Kalshi; Thursday's amicus wave forces the appellate panel to weigh in against a wall of opposition
Meanwhile, the CFTC published its 267-page Notice of Proposed Rulemaking in the Federal Register on Friday — formally opening a 45-day public comment period on a proposed framework for evaluating prediction market event contracts under Regulation 40.11. The NPRM defines "gaming" for regulatory purposes for the first time, and would allow most sports outcome contracts (win-loss, score differentials, season-long performance) while prohibiting discrete single-play action contracts and pre-collegiate events.
Gensler's brief explicitly limits its scope to sports-related event contracts. He declined to weigh in on political, economic, or entertainment prediction markets — categories where the CFTC's authority over derivatives is more firmly established.
What Traders Need to Know
The court battles will play out over months to years. For traders actively using prediction markets, here is the practical picture:
The Minnesota test case: Minnesota has banned prediction markets outright, making it a felony to operate or advertise on them, with enforcement beginning August 1, 2026. The CFTC has sued the state. If the Sixth Circuit sides with Ohio — or if the Ninth Circuit rules against Kalshi — Minnesota's approach becomes a blueprint for additional state bans.
The Supreme Court is the likely endpoint: Conflicting circuit court rulings would create the clearest on-ramp to SCOTUS review. Gensler, Selig, and independent legal analysts all characterize the outcome as heading there.
Sports volume dominates both platforms: Gensler estimates that sports betting now accounts for 70% to 80% of trading volume on Kalshi and Polymarket. That share is what makes the jurisdictional question existential — not just for the platforms, but for sportsbook operators like DraftKings (DKNG) and Flutter Entertainment (FLUT/FanDuel), which compete directly for the same customer base and tax dollars.
Platform access as of June 12, 2026:
| Platform | Available | Not Available |
|---|---|---|
| Kalshi | 42 states | AZ, IL, MA, MD, MI, MT, NJ, OH (+ MN starting Aug 1) |
| Polymarket (US/QCX LLC) | 48 states + D.C. | AZ, IL, MA, MD, MI, MT, NJ, NV, OH |
| Robinhood Markets | Most states | Check platform for current restrictions |
Both Kalshi and Polymarket US (QCX LLC) sports markets remain accessible to eligible U.S. users on their respective platforms while the legal battles proceed.
Sources: Bloomberg (June 12, 2026), Semafor interview with CFTC Chair Selig (June 12, 2026), ProphetX press release via PR Newswire (June 11, 2026), Reuters (June 10, 2026), Federal Register NPRM 2026-11854 (June 12, 2026).