- ▸ The former CFTC chair argues Congress never intended Dodd-Frank to make the CFTC a nationwide sports betting regulator or preempt state gaming laws.
- ▸ Gensler contends that if Kalshi is correct that sports-event contracts are swaps, then virtually all off-exchange retail sports betting since 2012 would also be illegal under federal commodities law.
- ▸ While the CFTC’s proposed gaming rule could shape future policy, the Sixth Circuit must decide what Congress meant when it passed Dodd-Frank in 2010, a question Gensler says strongly favors the states.
Gary Gensler, former Goldman Sachs partner, CFTC chairman from 2009-2014 and SEC chair from 2021-2025, has seen Dodd-Frank from every angle. He helped negotiate it, implemented it as CFTC chairman, and testified before Congress 54 times defending it. On Thursday, he filed an amicus brief in the Sixth Circuit arguing that his former agency and Kalshi are misreading it.
“This case boils down to the question of what, if anything, Congress did in Dodd-Frank with regard to sports betting,” starts Gensler’s argument. “Kalshi contends that, by encompassing some event contracts within the statutory definition of swap, Congress purposefully made the CFTC a nationwide sports betting regulator and denied states their traditional police power to regulate gaming, including sports betting. The answer—from someone who was there—is that Congress did nothing of the sort.”
Kalshi v. Schuler is Kalshi’s appeal of a March ruling by U.S. District Judge Sarah D. Morrison, who found the company had failed to show Congress intended the Commodity Exchange Act (CEA) to preempt Ohio’s sports gambling laws. The Sixth Circuit has oral argument on July 30. Gensler’s amicus brief lands the same week that Ohio’s attorney general, 30 Native American tribes and 11 tribal associations, the American Gaming Association, and Better Markets all filed on Ohio’s side. CFTC Chair Michael Selig filed his own amicus for Kalshi in May, saying at the time that “The federal district court in Ohio took an improperly narrow view of the Commission’s jurisdiction, and we are asking the Court of Appeals to correct that error.”
As we mapped out in our field guide to the three textual hurdles in Kalshi’s sports-contract cases, the rulings turn on whether sports outcomes qualify as commodities, whether the resulting contracts are swaps, and whether the CEA’s exclusive-jurisdiction provision reaches state gaming enforcement. Gensler’s brief lands squarely on all three, and sharpens an argument made in several state cases: if Kalshi’s swap classification is correct, every off-exchange retail sports bet in America has been illegal under CEA statute 2(e) since 2012.
Gensler’s main arguments
The Gensler amicus brief covers runs five core arguments, each aimed at a different piece of Kalshi’s theory, but they all converge on his main point that no one involved in drafting or implementing Dodd-Frank ever thought it had anything to do with sports betting.
The purpose of the law
Gensler traces the CEA back to its origin in the 1850s grain futures markets, instruments designed to let farmers hedge price risk at planting time. Dodd-Frank was the response to the 2008 financial crisis, built around credit-default swaps, interest-rate instruments, and the unregulated OTC derivatives market that contributed to the collapse.
“Sports betting was not part of the 2008 financial crisis or the response to it. 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.”
Gensler draws on his firsthand role in Dodd-Frank’s passage, including his experience negotiating with the late Senate Majority Leader Harry Reid of Nevada.
“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. No one working on Dodd-Frank — in the Executive Branch or Legislative Branch — was attempting to put a curve ball by the Senate Majority Leader to legalize a national sports-betting regime or preempt the Nevada Gaming Commission, a Commission Majority Leader Reid had chaired (1977–1981). He would not have allowed it. Nor did Congress do so.”
Sports bets aren’t swaps
The swap definition at section 1a(47)(A)(ii) covers contracts “associated with a potential financial, economic, or commercial consequence.” Gensler argues this prong, the one Kalshi relies on, must be read in context of the other five swap definitions, all describing instruments used for hedging economic risk.
To the congressional intent point, he argues that “Congress did not consider bets on outcomes of sporting events, how many points a player would score in a quarter, or sportsbook-style parlays to be swaps. These contracts do not have hedgers meeting speculators to lay off risk.”
He sharpens the point by referencing Kalshi’s own brief in a prior D.C. Circuit case related to election contracts, where he notes Kalshi counsel conceded that “at least in general, contracts relating to games—again, activities conducted for diversion or amusement—are unlikely to serve any ‘commercial or hedging interest.”
Gensler also rejects the idea that DCM listing transforms the instrument’s legal character: “It is the terms of the instrument, not the type of counterparties that enter into it or the venue in which it is entered, that determines whether it is a swap.”
No preemption of state gaming authority
Gensler also argues that Congress knew how to preempt state gaming laws, and did so explicitly when it wanted to. In the Commodity Futures Modernization Act of 2000, it did so for a specific enumerated list under 7 U.S.C. § 16(e)(2) and did not extend that list to sports or event contracts in Dodd-Frank.
According to Gensler, if Kalshi’s reading were correct that Congress gave the CFTC exclusive jurisdiction and preempted the states’ jurisdiction to regulate sports betting, Dodd-Frank would have “implicitly repealed PASPA” eight years before the Supreme Court struck it down, “yet none of the sophisticated parties involved in Murphy v. NCAA” (2018) ever made that argument.
The Special Rule
The “Special Rule” in statute 7a-2(c)(5)(C) allows the CFTC to prohibit event contracts involving “gaming,” terrorism, war, or assassination. Gensler personally assisted in drafting it, recalls discussions with Reid’s office about including “gaming” in the list, and in 2011 implemented Rule 40.11 by unanimous CFTC vote, categorically prohibiting contracts “involving, relating to, or referencing” gaming.
As Gensler points out, the only reference to sports betting in the entire Dodd-Frank legislative record was a floor exchange between Senators Lincoln and Feinstein, which he says confirms his read. Lincoln stated the provision was meant to ensure the CFTC could “prevent gambling through futures markets,” adding that contracts on “sporting events such as the Super Bowl, the Kentucky Derby, and Masters Golf Tournament” would “not serve any real commercial purpose. Rather, they would be used solely for gambling.”
Kalshi reads the Special Rule as proof sports contracts can lawfully be listed on a DCM, while Gensler says the logic runs the opposite direction.
No “elephants in mouseholes”
One of Gensler’s key points goes back to the old elephants in mouseholes argument which argues that Congress never intended for the CFTC to oversee sports betting.
“Preempting state authority over sports betting — an over $165 billion per year industry — has major implications for states’ power to protect their residents. It’s not the kind of thing Congress hides in a subpart of a definition — a mousehole too small for the Supreme Court to notice in Murphy. If Dodd-Frank had preempted the states on sports betting, it would have been one of the biggest stories about Dodd-Frank at the time. But nobody ever mentioned it,” writes Gensler.
His reference to a 2025 ruling in the same circuit court, Ebu v. U.S. Citizenship & Immigr. Servs., is strategic as Gensler points out to the panel that it applied this exact canon in its own courtroom last year. The implication is that the same logic applies here.
The CEA Section 2(e) trap
Underlying all five arguments is a key statutory text that Gensler brings up in Section II of his amicus brief. Section 2(e) of the CEA makes it “unlawful for any person, other than an eligible contract participant, to enter into a swap unless the swap is entered into on, or subject to the rules of,” a CFTC-registered contract market. Eligible contract participants are generally financial institutions and individuals with $10 million or more in investments, not retail sports bettors.
That means that under 2(e), retail participants may only trade swaps on a CFTC-regulated exchange. The logical conclusion Gensler, state counsel, and some courts have drawn is that, if sports-event contracts are swaps, sports bets under state regulation are also swaps, and would be in violation of the CEA. As Gensler framed it in his brief:
“If Amicus, Ohio, and 38 other states are wrong, and Congress swept sports betting into the swap definition, then all off-exchange retail sports bets since October 2012 have been illegal. That is every sports wager placed in a casino, on an online sports book, or between two friends at a bar.”
Kalshi’s answer is that off-exchange sportsbooks were never swaps to begin with, so statute 2(e) never touched them. The company’s counsel contends that preemption applies to DCM trading, not to sports outcomes as a subject matter. As the company argued in its New Jersey reply brief: “Federal law preempts state regulation of trading on DCMs; it leaves state regulation of sportsbooks and casinos untouched. The question is not whether Kalshi should be regulated, but rather by whom. The answer is clear: The CFTC has ‘exclusive jurisdiction.'”
The Third Circuit’s 2-1 April ruling agreed with Kalshi on both the swap classification and preemption.
The middle ground problem
At Ninth Circuit oral argument in April, Judge Lee pressed both sides on whether DCM-listed sports contracts can coexist alongside state-licensed sportsbooks as parallel systems. Kalshi says yes. As we covered in our recent legal field guide, courts framing this as a DCM-trading question have reached different conclusions than courts framing it as a sports-gambling question, and that framing choice has largely determined the outcome at the district level.
Gaming attorney Daniel Wallach argues the coexistence theory doesn’t survive the statutory text regardless of framing.
“Judge Lee raised a very interesting point and attempted to theorize a middle ground or a limiting principle, but that so-called middle ground is not supported by the statutory language. Section 2(e) is expressed in mandatory language, and if the court applies the text as written, the only conclusion to be drawn from Kalshi’s interpretation is that all sports bets are swaps and must be operated on CFTC-regulated exchanges.”
Wallach also argues that the DCM field framing won’t survive judicial scrutiny: “Courts are going to look at the substance of the transaction, not the labels affixed to them by self-interested parties.”
That argument turns on the statutory definition of “swap” in the CEA, which has six subparts. Subpart (ii), the event-contract prong Kalshi relies on, covers contracts tied to “a potential financial, economic, or commercial consequence.” Subpart (iii) lists 22 specific instrument types Congress named as swaps, including interest rate swaps, currency swaps, commodity swaps, and so on.
Ohio’s appeal brief targets both Kalshi and the CFTC’s amicus directly: “Like Kalshi, the CFTC imagines a world in which every point scored counts as a significant event that can be loosely connected to economic consequences. In making these limitless arguments, the CFTC shows surprisingly little respect for the CEA’s boundaries: the CEA reaches only meaningful financial instruments. The CFTC’s position, moreover, would render pointless the other statutory definitions of swap.'”
Gensler arrives at the same interpretation: “Kalshi’s alternative reading of subparagraph (ii) makes the list of swaps in subparagraph (iii) superfluous, because the event-contract category would be so broad that it would include the entire list.”
Gensler’s point is that every instrument on that list obviously has financial consequences, so if subpart (ii) already covers anything with any economic consequence, Congress had no reason to write subpart (iii) at all. Courts don’t read statutes to produce that kind of redundancy, and both Ohio and Gensler argue Kalshi’s reading of subpart (ii) fails for exactly that reason.
The Sixth Circuit panel already telegraphed skepticism in April, denying Kalshi’s stay in April, with language that tracks with Gensler’s argument. The court wrote that it “must begin with the presumption that Congress did not mean to preempt ‘Ohio’s historic police powers’ unless the CEA discloses that as ‘the clear and manifest purpose of Congress.'”
Some counterpoints worth considering
Not everyone reads Gensler’s “I was there” argument as legally conclusive. Washington and Lee School of Law professor Melinda Roth pushed back publicly this week in a LinkedIn comment:
“While Gensler has some interesting comments, I think it is funny that he makes the (in my mind) weak Congressional intent argument. He was not in Congress and while he worked with them, he cannot speak directly to intent. Moreover, everything is contextual as when he negotiated the Commodity Futures Modernization Act of 2000 or worked to implement Dodd Frank in 2010, sports betting was actually still illegal.”
As her comment indicates, courts weigh formal legislative record including committee reports, floor statements, and conference reports as authoritative sources of congressional intent. An executive branch official’s recollection of negotiating dynamics is something different. Gensler does anchor in formal record, pointing out that the Lincoln/Feinstein colloquy is the “only known reference to sports betting in the Dodd-Frank legislative history.” But the Reid anecdote would be considered inference rather than documentation.
Roth’s second point is also worth consideration. Dodd-Frank was written when sports betting was broadly illegal. Whether that cuts for Gensler (Congress couldn’t have meant to regulate something that didn’t legally exist) or against him (the swap definition was written with no sports betting in mind, leaving the text genuinely ambiguous) is what the Sixth Circuit and others have to resolve.
Pushback on Gensler’s brief has come from a number of sources, including from former CFTC Commissioner Brian Quintenz, who was also the presumed CFTC chair nominee before Michael Selig. Quintenz argued that Gensler is selectively disavowing a statute he deliberately wrote to be expansive, and that exchange-traded event contracts fall within CFTC jurisdiction regardless of what Gensler now claims he intended.
Gary Gensler deliberately sought an intergalactic reach for the CFTC through Dodd Frank. Now he’s saying that didn’t mean a few things he doesn’t like. The law is the law. Exchange-traded event contracts, on all things, are within the agency’s jurisdiction.https://t.co/8T3F5wm2wR
— Brian Quintenz (@BrianQuintenz) June 11, 2026
The CFTC rule, and why it may not move courts
Two days before Gensler filed, the CFTC published a 267-page proposed rule, formally filed in the Federal Register on June 12. The proposed rule formally defines “gaming” under Rule 40.11 for the first time, a term contested in every prediction markets court battle. The definition covers activities “typically engaged in for recreation or to entertain others; governed by rules; with measurable occurrences or outcomes dependent on participants’ luck, skill, or athletic ability.” The proposal also narrows the “involves” standard to focus on what determines settlement, a shift the CFTC acknowledges departs from its prior litigation positions.
If finalized, the rule would establish a framework permitting most existing sports contracts while flagging categories like injury props, random-chance outcomes, pre-collegiate sports, and some other discrete-action contracts (i.e. micro-betting markets) as raising greater public interest concerns.
Whether it moves the needle in court is a different question. With Chevron deference eliminated by Loper Bright (2024), courts conduct their own independent review of ambiguous statutory language rather than deferring to agency interpretation.
Ohio’s brief, filed before the proposed rule dropped, already anticipates the dynamic. Ohio argues the CFTC’s current position “deserves no special weight,” having shifted materially from its unanimous 2011 rulemaking, its 2024 litigation stances, and its own acknowledgment two years ago that it lacked a “statutory mandate” to regulate the “rapidly evolving field” of gambling.
The proposed rule’s 45-day comment period closes July 27, three days before the Sixth Circuit hears oral argument in this case. Even if finalized, its weight in court is limited. What the Sixth Circuit is required to resolve on July 30 is the same question Gensler’s brief addresses: what Congress wrote in 2010, not what the CFTC proposes in 2026.
More on Kalshi
