Ripple CTO emeritus David Schwartz pushed back on a legal argument that the CFTC's rulemaking over prediction markets is doomed under the major-questions doctrine. The comment follows a federal appeals court ruling that let Nevada regulators keep overseeing Kalshi's sports-event contracts.
David Schwartz, Ripple's CTO emeritus, disputed a claim that the Commodity Futures Trading Commission's authority over prediction markets is legally dead on arrival. He argued the real question is narrower: whether Congress delegated power to regulate gambling through exchange-traded contracts at all.
The dispute over Kalshi
Schwartz was responding to sports betting and gaming lawyer Daniel Wallach, who had argued on X that the CFTC's rulemaking is dead on arrival under the major-questions doctrine, a legal principle that limits federal agencies from claiming broad powers without clear authorization from Congress.
Schwartz rejected that framing. According to U.Today: "This seems to be incorrect to me." He said the question is only whether Congress delegated the power to regulate gambling through exchange-traded contracts, and that traditional sportsbook gambling differs from exchange-traded products.
He went on to argue that Congress did not intend to replace state-regulated sportsbook gambling with exchange-traded products outside state regulation, but rather meant to create a uniform federal framework for such products.
What the court decided
The dispute traces back to March 2025, when the Nevada Gaming Control Board sent Kalshi a cease-and-desist letter, claiming its sports-event contracts amounted to an unlicensed sports pool under state gaming law. Kalshi countered that the CFTC's authority over swaps preempted Nevada's gaming rules.
On Friday, the 9th U.S. Circuit Court of Appeals in San Francisco sided with Nevada, upholding the state's oversight of prediction markets. Circuit Judge Ryan Nelson said Kalshi's contracts carry the hallmarks of sports betting, a form of gambling that the CFTC does not regulate.
Nelson added that the CFTC is not a national gambling regulator, and that it would be difficult to conclude Congress intended to upend decades of gambling oversight based on broad definitions in a Wall Street reform bill.
Source: U.Today
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