Gary Gensler Says Kalshi Is Flat Wrong: Sports Bets Aren’t Swaps

Securities and Exchange Commission (SEC) Chair Gary Gensler stated on May 21, 2024, that sports betting platforms like Kalshi are incorrect in their assertion that their offerings are not subject to federal financial regulation. Gensler, speaking at a conference, clarified that the SEC views certain event contracts, including those based on sports outcomes, as securities. He specifically addressed Kalshi's argument that its sports bets are not swaps, a type of derivative contract that falls under SEC oversight. Gensler emphasized that the SEC's jurisdiction extends to any instrument that functions like a security, regardless of its label. He indicated that the SEC would continue to scrutinize such platforms to ensure investor protection and market integrity. This stance suggests a potential for increased regulatory action against platforms offering event contracts tied to unpredictable outcomes if they are deemed to be operating outside of established financial regulations.