Dodd tells Supreme Court Dodd-Frank did not federalize sports betting

Former Sen. Christopher J. Dodd has urged the US Supreme Court to hear New Jersey’s challenge to Kalshi, arguing that the Dodd-Frank Act did not quietly shift control of sports wagering from states and tribes to the Commodity Futures Trading Commission.

In an amicus brief in Flaherty v. KalshiEX, LLC, No. 26-299, Dodd argued that sports wagers are not swaps merely because they pay out on an event. He said treating a wager’s payout as the necessary financial, economic or commercial consequence would allow a contract to “manufacture the statutory predicate for its own treatment as a swap.”

Dodd introduced swaps-reform legislation in 2009, worked with Rep. Barney Frank on the law that became Dodd-Frank, and chaired the Senate Banking Committee from 2007 to 2011. His brief says the 2010 law responded to the financial crisis and was not meant to authorize nationwide sports betting or displace state and tribal primacy over gaming.

The former Connecticut senator drew a distinction between derivatives used to manage pre-existing financial or commercial risks and sports wagers, which he said create a new risk. He also argued that the Commodity Exchange Act’s exclusive-jurisdiction provision establishes the CFTC as regulator of covered financial instruments, but does not expressly override every state or tribal gaming law applying to contracts listed on a designated contract market.

Dodd further maintained that the Commodity Exchange Act’s Special Rule treats gaming as activity that may be excluded from derivatives markets, rather than as a federally authorized product. The Third Circuit’s contrary approach, he argued, would turn the CFTC into a national gambling regulator. He also challenged the appeals court’s treatment of a statutory carveout for state-law claims, saying the court did not explain how a provision permitting such claims could nonetheless pre-empt the field in which they arise.

As we reported in September, New Jersey’s petition asks the justices to resolve whether Dodd-Frank pre-empts state regulation of sports bets offered through CFTC-registered markets. The state says the Third and Ninth Circuits have reached conflicting conclusions, while related litigation involving Kalshi, other companies and the CFTC has drawn in at least 20 states.

The dispute arose after Kalshi began offering sports-related event contracts in January 2025. New Jersey issued a cease-and-desist letter two months later, alleging that the contracts violated its constitution and gambling laws. Kalshi sued New Jersey in 2025 seeking to offer sports bets without complying with the state’s gambling laws, and the Third Circuit ruled 2-1 on April 6 that the contracts were swaps traded on a CFTC-licensed designated contract market, making New Jersey’s law likely pre-empted.

A separate amicus brief from former CFTC Chair Gary Gensler also supported New Jersey’s petition, arguing that Congress did not transfer jurisdiction over sports betting from states to the CFTC.