Former SEC Chair Gensler argues prediction markets must follow state laws

Former U.S. SEC Chairman Gary Gensler has stated that sports prediction markets must not circumvent state laws. According to CoinDesk, Gensler submitted an amicus brief to the sixth U.S. Circuit Court of Appeals, arguing that the sports contracts offered by decentralized prediction market Kalshi violate state-level gaming and gambling regulations. His filing counters a claim made last month by the Commodity Futures Trading Commission (CFTC) that such markets fall under its federal jurisdiction. Gensler contended that while Congress granted the CFTC authority over certain derivatives, this was not intended to nullify state gambling laws. If the federal court sides with the CFTC, states could lose significant tax revenue. Conversely, a victory for the states would require prediction markets to register and comply with regulations in each state of operation, potentially facing criminal charges for running unregistered platforms in some jurisdictions.