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Key Takeaways
- Gensler filed an amicus brief arguing sports prediction markets fall outside Dodd-Frank’s swap definition and don’t override state gambling laws.
- Tribal groups, the American Gaming Association, and Better Markets filed separate briefs opposing Kalshi in the Sixth Circuit.
- Circuit courts are splitting on federal preemption, raising the odds of eventual Supreme Court review.
Kalshi’s sports prediction markets face mounting legal opposition after former CFTC and SEC Chair Gary Gensler filed an amicus brief arguing the contracts fall outside Dodd-Frank’s swap definition. The filing joins briefs from the Indian Gaming Association and affiliated tribal organizations, the American Gaming Association and Better Markets, all opposing Kalshi’s position before the Sixth Circuit Court of Appeals.
Case Centers on Kalshi’s Preemptive Suit Against Ohio
The appellate case stems from a lawsuit Kalshi filed against Ohio in an effort to block the state from taking enforcement action against its sports event contracts. A federal judge in Ohio denied Kalshi’s request for a preliminary injunction in March, and Kalshi appealed that ruling to the Sixth Circuit.
The dispute turns on whether sports-event contracts count as swaps under federal commodities law, which would place them under exclusive CFTC jurisdiction. If they do not meet that definition, state gambling laws would apply.
Gensler chaired the CFTC from 2009 to 2014, during the period when Dodd-Frank was implemented, and later led the SEC from 2021 to 2025. His brief draws on that history of the swap definition to argue Congress never intended the law to cover sports betting contracts.
Gensler Argues Sports Contracts Fall Outside Dodd-Frank’s Swap Definition
The brief states that “Congress did not include sports betting contracts within the statutory Dodd-Frank definition of swap” and that such contracts do not align with the Commodity Exchange Act’s focus on hedging economic risk, since sports bets are very rarely about hedging.
Gensler also pushed back directly on the CFTC’s own legal theory in the case. The agency filed its amicus brief in the Sixth Circuit in May, arguing that Congress’s definition of a swap was broad enough to cover the event contracts Kalshi lists on its designated contract market.
Gensler’s filing called that reasoning a stretch, arguing the CFTC’s hedging rationale for sports bets is “at best only tenuously connected to reliable hedges of commercial risks” and that Congress limited swap treatment to contracts tied to a genuine financial or commercial consequence.
Gensler Points to Nevada to Challenge Kalshi’s Dodd-Frank Reading
To support his reading of congressional intent, Gensler pointed to the political dynamics surrounding Dodd-Frank’s passage. The brief argued that Senate Majority Leader Harry Reid of Nevada would never have accepted legislation that displaced sports betting, an activity central to his state’s economy, by placing it solely under CFTC oversight.
The argument echoes a point raised earlier in the broader litigation, where a federal judge in a related Ohio ruling cited testimony from a former senator involved in the 2010 Dodd-Frank deliberations on the limited commercial purpose of sports-event contracts.
Tribal Groups, Gaming Industry, and Better Markets Line Up Against Kalshi
The Indian Gaming Association and affiliated Native American tribal organizations filed their own brief arguing that Kalshi’s sports markets infringe on tribal sovereignty under the Indian Gaming Regulatory Act, which requires that gaming activity on tribal lands benefit the tribes rather than private companies.
The filing stated that Kalshi has entered onto state and tribal lands to conduct unregulated gaming through what it calls “legal sports betting,” diverting revenue away from tribal and state governments.
The American Gaming Association’s brief focused on similarities between Kalshi’s offerings and traditional sportsbooks, including parlay-style products. The filing cited a Kalshi trademark application describing its services as related to providing information on sports betting and organizing sports betting and gambling contests.
Better Markets filed a separate brief arguing sports-related event contracts should not be treated as swaps, pointing to earlier Kalshi filings that distinguished between political-event markets, such as elections, and sports-event markets like horse racing.
Circuit Courts Have Split on Federal Preemption Question
The fight is also playing out in parallel cases around the country. The Third Circuit Court of Appeals ruled in April that New Jersey likely could not shut down Kalshi’s sports-event markets, finding federal law likely preempted the state’s gambling regulations.
A Ninth Circuit panel has appeared more receptive during proceedings to arguments favoring state authority, though that case has not been decided. The Sixth Circuit itself contains a split at the district level: an Ohio court denied Kalshi’s injunction request in March, while a Tennessee court within the same circuit granted Kalshi a preliminary injunction earlier this year.
The CFTC, now led by Chairman Mike Selig, has filed amicus briefs supporting Kalshi and other platforms in several of these cases and has sued multiple states directly over their enforcement actions. The litigation is expanding across multiple circuits, and a deeper split could increase the odds of Supreme Court review.
