Gary Gensler, former chairman of both the CFTC and SEC, has submitted an amicus brief in a Sixth Circuit case arguing the CFTC does not have authority to regulate sports betting markets nationwide.

In the brief filed on June 11, Gensler contends that Congress never intended to transform the CFTC into a national sports betting regulator when it passed the Dodd-Frank Act in 2010. The law was enacted in response to the 2008 financial crisis and brought large portions of the derivatives market under CFTC supervision, including swap dealers, clearing requirements, and transparency standards.

Gensler, who chaired the CFTC under President Obama, argues that lawmakers never discussed assigning sports betting oversight to the agency, which was designed to regulate commodities and financial derivatives, not the volume and complexity of activity now occurring on prediction market platforms.

The brief contends that the Commodity Exchange Act and its amendments were designed to facilitate hedging and price discovery on commercial markets.

Sports betting contracts, Gensler argues, do not serve those risk management purposes and were never discussed during the drafting or debate of Dodd-Frank. He adds that Congress did not preempt state authority over sports betting and that the CFTC lacks both the mandate and the resources to act as a nationwide gaming regulator.

In a Thursday interview with CNBC, Gensler also warned about the difficulty of preventing insider trading in contracts tied to political and geopolitical events. He referenced earlier debates over markets linked to terrorism and foreign affairs, and argued that Congress should consider stronger rules to prevent the misuse of nonpublic information in prediction markets.

“I don’t think you can really protect the integrity of the underlying market. It’s really hard to protect the underlying integrity of sports,” he stressed. “Can you do it on what you call political events or geopolitical? Will somebody leak something out of the situation room?”

“It’s very hard to ensure that there’s no insider trading in the stock market, but in these markets it’s so much harder. There are so many more contracts. There’s not like an issuer,” he said.