Indiana gaming director questions CFTC legal basis for silence

Jason Giles, executive director of the Indiana Gaming Association, said afterward that he could not identify any legal basis for that silence. He said it plainly, in public, two days later. That is not a minor grievance from a stakeholder who lost an argument. That is the executive director of a major tribal advocacy body saying he does not understand what law the CFTC believes it is following.

Scott Crowell's answer to Giles — "what credibility?" — has already drawn attention, but the sharper claim came after it. Crowell accused Selig of directing federally regulated entities to defy court orders. That is a serious allegation, and it deserves to be read as one. The Ninth Circuit has now held, on IGRA grounds, that Kalshi's sports event contracts constitute illegal gambling on tribal lands. Selig's position, maintained publicly, is that the CFTC holds exclusive federal authority to regulate these contracts. Those two positions cannot both be right, and a federal court has weighed in.

Here is where I think the reporting undersells the risk. Most of the coverage has treated this as a regulatory dispute — tribes versus a federal agency, with courts eventually sorting it out. I don't think that framing captures what is actually in motion. What Crowell described is an agency chairman who believes he can outlast the court losses by moving to a rulemaking that locks in federal preemption before the circuit split resolves. If the CFTC finalizes a rule under Regulation 40.11 that explicitly frames sports event contracts as federally regulated trading instruments, any state or tribal enforcement action runs into a preemption argument that has to be litigated fresh, in a new proceeding, against a final rule rather than an interim position. The losses in California and Montana would still be losses, but the battlefield shifts.

I am adjusting this read for my own bias. I have a documented tendency to weight the downside scenario, and Crowell is a partisan in this fight. But the structure of what he described is internally consistent with how agencies behave when they are losing in court and still believe they are right on the law. You don't go quiet about a rule you intend to withdraw.

The tribal leaders left Washington without anything they could take back to their councils. No clarification on the rulemaking timeline, no acknowledgment of the court decisions, no signal on whether the CFTC would seek further review. That silence is, at minimum, a material input for anyone pricing the probability that federal preemption gets resolved cleanly before a patchwork of state and tribal enforcement actions makes Kalshi's US sports market structurally inoperable in several jurisdictions at once.

There is a market question here that is genuinely unresolved: whether the CFTC finalizes a rule that survives judicial review on preemption grounds before the Ninth Circuit holding spreads to additional jurisdictions. I think that market, wherever it is trading, is underweighting the possibility that Selig moves to finalization precisely because he has run out of other options — and that a final rule, even a legally fragile one, resets the litigation clock in ways the agency finds preferable to the current trajectory.