Gary Gensler Backs States in Fight Over Prediction Market Regulation

Gary Gensler, former Chair of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), stated this week that Congress did not intend for sports betting to fall under exclusive federal oversight. Gensler's comments, made in a filing to the U.S. Court of Appeals for the Second Circuit, support New York and other states in their legal battle against prediction market operators. He argued that the Commodity Exchange Act, as amended in 2000, aimed to regulate futures and options markets, not the broader category of prediction markets. Gensler's position aligns with arguments made by New York Attorney General Letitia James, who is seeking to shut down prediction markets operating in the state without proper licensing. The case involves companies like PredictIt, which has been operating under a no-action letter from the CFTC since 2014 but faces challenges to its continued operation. Gensler's intervention adds significant weight to the states' argument that these markets should be subject to state-level gambling regulations rather than federal commodities law.