Former Commodity Futures Trading Commission chairman Gary Gensler and the Chicago Mercantile Exchange have joined the legal opposition to regulated prediction markets. The developments emerged during a recent Indian Gaming Association webinar and a new lawsuit, highlighting regulatory disputes over sports event contracts.
Regulatory Scope and Contract Classification
Gensler, who directed the CFTC from 2009 to 2014 and the SEC from 2021 to 2025, argued that Congress never authorized the commission to oversee nationwide sports betting. His CFTC tenure coincided with the Great Recession and the 2010 Dodd-Frank Act, shaping his perspective on federal regulatory boundaries. Speaking at the New Normal webinar with hosts Victor Rocha and Jason Giles, he noted that the agency's original mandate did not include oversight of athletic wagering. He filed an amicus brief on 11 June supporting Ohio's legal challenge against Kalshi, emphasizing that the commission lacks the operational capacity to manage a national betting framework.The core of the dispute centers on whether sports event contracts qualify as financial swaps. Gensler's brief states that congressional legislation did not classify bets on game results, player scoring, or parlays as swap instruments. Reclassifying these contracts would render a decade of state and tribal sports wagering technically illegal.
Legal proceedings in Nevada illustrate this classification debate, where Carson City District Court Judge Jason Woodbury initially issued a preliminary injunction against Kalshi before reversing the decision. That ruling remains the sole instance of a court mandating a trading suspension within a specific jurisdiction. Information is based on the Indian Gaming Association New Normal webinar and recent court filings.