Former SEC, CFTC chair Gensler says prediction markets don't preempt state gambling laws
Former SEC and CFTC chair Gary Gensler said prediction markets do not override state gambling regulations. In remarks published June 12, Gensler contended that federal oversight of event contracts under the Commodity Exchange Act does not stop states from enforcing their own gaming laws against platforms operating within their borders. The position, delivered during a CNBC interview that also covered sports betting and insider trading concerns, carries particular weight given Gensler's dual tenure leading the two agencies most relevant to prediction-market oversight. Gensler's intervention comes as multiple states pursue enforcement actions against prediction market platforms.
Gensler's argument arms state attorneys general with a former federal regulator's authority in active cases against Kalshi and Polymarket. Any court citing his preemption skepticism weakens the platforms' federal shield and invites parallel enforcement nationwide.
Gensler's stance joins Minnesota, Rhode Island, and New Mexico among states actively testing whether federal event-contract oversight overrides their gambling laws, adding a former regulator's voice to the CFTC's parallel preemption lawsuits now pending in federal court.