(AsiaGameHub) – By: Gavin Thorne
The CFTC is effectively rewriting the dictionary to bypass state gambling laws. It is a bold federal power grab dressed up as financial innovation. Thirty-nine states and the District of Columbia are pushing back hard. They see this as a direct threat to their regulatory turf. The agency, however, is moving full steam ahead. It claims exclusive authority over these markets. This creates a massive constitutional clash. States are uniting against a federal regulator gone rogue. The battle lines are drawn clearly between state sovereignty and federal overreach.
Ohio is leading the charge against Kalshi in court. A host of tribes and the American Gaming Association joined the fray. They all filed briefs supporting Ohio’s position. Better Markets, a financial regulation nonprofit, sided with the states. The CFTC countered by filing a brief in support of Kalshi. The commission formally recognized sports contracts as valid this week. It released a proposal for new industry rules. The move aims to cement federal control. The agency argues these are financial contracts, not bets.
Chairman Michael Selig is aggressively defending licensed operators. He has filed lawsuits in several states to protect them. He claims the CFTC must protect market integrity without blocking innovation. Former Chairman Gary Gensler disagrees completely. He filed a brief supporting Ohio against Kalshi. Gensler asserts that sports bets are not swaps. He recalls the Dodd-Frank Act of 2010. He insists no one intended to approve sports contracts back then. The legal foundations are being disputed at the highest levels.
The hypocrisy on Capitol Hill is staggering. Senator Blanche Lincoln played a major role in writing Dodd-Frank. She explicitly warned against event contracts on the Super Bowl. She stated such contracts served no commercial purpose. She argued they were used solely for gambling. Her stance has shifted dramatically with time. Lincoln is now a registered lobbyist for Kalshi. She supports the company’s right to offer those exact sports contracts. The revolving door spins faster than ever.
The legal war is moving to the Sixth Circuit Court of Appeals. Kalshi previously won a landmark 2-1 ruling in the Third Circuit. New Jersey plans to take that case to the Supreme Court. The Sixth Circuit bench looks favorable for Kalshi. Seven of its sixteen judges were appointed by Trump. Three others were appointed by George W. Bush. Trump has voiced strong support for prediction markets. The four Biden appointees might lean the other way. The judicial panel assignment will decide the fate.
The odds favor Kalshi because the regulatory fix appears rigged for their victory.
Author bio: Gavin Thorne, an investigative journalist tracking special interests and legislative affairs based in Washington, D.C.