Gaming Regulators File Amicus Brief Urging Supreme Court to Settle Kalshi Event Contract Dispute

Gaming regulators from the United States and abroad have intensified efforts to bring the legal battle over Kalshi’s sports event contracts before the U.S. Supreme Court. The International Association of Gaming Regulators (IAGR) and the North American Gaming Regulators Association (NAGRA) submitted a joint amicus brief on October 2 in support of New Jersey’s petition in Flaherty v. KalshiEX. The filing seeks clarity on whether sports-related event contracts on Commodity Futures Trading Commission-regulated exchanges fall outside state gambling laws under the Commodity Exchange Act.

As reported by World Casino News, conflicting appellate rulings have created uncertainty for oversight, consumer protections and tribal gaming rights. The brief marks the second amicus filing backing New Jersey, following one from the National Council of Legislators from Gaming States in September.

Circuit Court Split on Federal Preemption

The dispute reflects a clear divide among federal circuits. The Third Circuit ruled in April that Kalshi’s contracts are likely swaps and that federal law likely preempts New Jersey’s sports wagering restrictions. The Ninth Circuit determined in August that Nevada’s gambling laws could apply to sports event contracts offered through prediction markets and later sided with tribal interests. In September the Sixth Circuit allowed Ohio and Tennessee to enforce their gambling laws against such contracts and held that state laws would not be preempted even if the contracts qualified as swaps.

Additional cases are pending. Maryland’s challenge awaits a Fourth Circuit ruling after oral arguments in May, while New York’s appeal remains before the Second Circuit. The IAGR and NAGRA brief argues that more circuit decisions will not produce uniformity and will instead multiply jurisdictions operating under conflicting rules. The Supreme Court opened its new term this week without scheduling any prediction market cases for initial consideration.

Risks to Consumer Safeguards and Tribal Authority

The regulators’ submission details core functions including licensing reviews, wager approvals, integrity monitoring, age verification, self-exclusion programs and enforcement against unauthorized operators. These responsibilities draw from frameworks in states such as Ohio, Illinois, Massachusetts, Tennessee, Nevada, New Jersey and Colorado. Ben Haden, president of IAGR, warned that prediction markets operating beyond established oversight weaken existing safeguards.

“IAGR is concerned that sports wagering offered through prediction markets leaves consumers without the protection gaming regulators provide pursuant to public policy established in their jurisdiction,” said Haden. “Our brief challenges the claim that offering a sports wager as an event contract exempts it from state gambling laws.”

Sports integrity monitoring requires visibility across the entire market; activity routed outside traditional systems limits detection of suspicious patterns. On tribal matters, NAGRA notes that sports betting constitutes Class III gaming under the Indian Gaming Regulatory Act. Event contracts offered outside tribal-state compacts while targeting the same consumers could erode tribes’ negotiated rights and protections. While four tribes in California and Oklahoma have partnered with Kalshi, including the Kletsel Dehe Wintun Nation seeking revenue for water infrastructure, hundreds of tribes oppose the practice. They argue such markets infringe on gaming rights that support tribal economies and represent more than 80% of the sector’s activity.

The Supreme Court has not yet indicated whether it will grant review. Separate petitions from Robinhood and Crypto.com remain pending.

Reporting: World Casino News

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