The International Association of Gaming Regulators (IAGR) and the North American Gaming Regulators Association (NAGRA) have asked the US Supreme Court to hear New Jersey’s case against Kalshi.
Meanwhile, gaming attorney Daniel Wallach projects that the justices could decide the future of sports prediction markets by June 2027.
In a joint amicus brief filed October 2 in Flaherty v. KalshiEX, the two organizations argue that the Commodity Exchange Act (CEA) does not exempt a sports wager from state gambling law just because a Commodity Futures Trading Commission (CFTC)-registered exchange lists it as an event contract.
The Third Circuit Court of Appeals ruled for Kalshi in its case against New Jersey. Meanwhile, the Sixth and Ninth Circuits have sided with the states. The groups state in the filing that they “agree with Petitioners that the Sixth and Ninth Circuits have the better view.”
The document is the second amicus brief in support of New Jersey’s petition, which the state filed in September.
The National Council of Legislators from Gaming States submitted the first one on September 22. With both filings on record, the Court now has the same request from lawmakers who write state gaming rules and from the regulators who enforce them: a ruling that defines where federal derivatives law ends and where state gambling authority begins.
“Regulators need clarity about their authority to enforce proven safeguards and the limits their jurisdictions have placed on gambling,” IAGR President Ben Haden said in a release.
One product, opposite answers
According to the regulators, the disagreement among federal appeals courts is the most urgent problem.
“The same product, offered by the same company under the same federal registration, is presently shielded from state regulatory authority within the Third Circuit and subject to it within the Sixth and Ninth,” the brief states.
The Philadelphia-based Third Circuit issued its ruling in April, and it remains Kalshi’s only federal appellate victory. The panel determined that the company’s sports event contracts likely qualify as swaps under federal law and that federal law likely preempts New Jersey’s sports-wagering statutes.
The San Francisco-based Ninth Circuit took the opposite position on August 28. The court held that Nevada’s gaming laws apply to sports event contracts on prediction markets, and it affirmed the dissolution of an injunction that had shielded Kalshi from enforcement by Nevada over its sports offerings.
The decision addressed preliminary relief, however, and did not resolve every claim in the case. In its opinion, the court refused to accept that Congress handed nationwide authority over sports gambling to federal commodities regulators through legislation aimed at financial markets.
The analysis also drew a line between sports bets and the financial derivatives that fall under the CEA, which prediction markets cite as the legal basis for their sports event contracts.
The Cincinnati-based Sixth Circuit added a further ruling in favor of the states on September 25. The court upheld the denial of Kalshi’s requested injunction in Ohio and vacated an injunction that protected the company in Tennessee, which cleared both states to enforce their gambling laws against sports event contracts.
The Sixth Circuit also held that the CEA would not preempt those laws even if the contracts were swaps.
More decisions are pending. The Fourth Circuit heard arguments in Maryland’s case in May but has not ruled, and New York’s appeal remains before the Second Circuit.
In the brief, IAGR and NAGRA contend that additional circuit rulings “will not produce uniformity” and will instead increase the number of jurisdictions that operate under conflicting rules.
Safeguards outside state reach
Most of the filing describes the work of gaming regulators and what they would lose if exchange-listed contracts fell outside their jurisdiction. The brief cites rules from Ohio, Illinois, Massachusetts, Tennessee, Nevada, New Jersey and Colorado, and it covers licensing and suitability reviews, approval of events and wager types, integrity monitoring, age limits, self-exclusion, prohibited-participant rules, regulator access to records and enforcement against unlicensed operators.
“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,” Haden said. “Our brief challenges the claim that offering a sports wager as an event contract exempts it from state gambling laws.
“Without the protection and oversight provided by gaming regulators, we are highlighting the risks of underage players being able to access gambling freely, problem gamblers being left without proven harm-prevention tools — or worse, being targeted by operators — and the integrity of sport being put at risk.”
The organizations also maintain that integrity monitoring requires visibility over the entire market. When wagering shifts outside the regulated system, it becomes activity that regulators “can no longer use to detect manipulation of the underlying events,” the brief states.
Tribal compacts enter the argument
Tribal gaming accounts for a large portion of the filing because NAGRA’s membership includes tribal regulators. The brief notes that sports betting is Class III gaming under the Indian Gaming Regulatory Act (IGRA) and that states such as Maine and Michigan have reserved some or all of their mobile markets for tribes.
If the same product can reach the same patrons outside the compact, the groups argue, tribal regulators “cannot enforce the terms on which the tribes’ rights were negotiated.”
Tribes have already secured a court win on the issue. In September, the Ninth Circuit found that tribes are likely to succeed on claims that unauthorized sports contracts offered on their lands violate IGRA. The court sent the case back for consideration of the remaining requirements for an injunction.
A ruling within nine months?
At last week’s Global Gaming Expo in Las Vegas, Florida-based gaming attorney Daniel Wallach laid out a timeline in which the justices would agree to take up the cases in December 2026 or January 2027, hear arguments in March or April, and issue a decision by June.
He called that the “quickest” scenario and said a later decision is at least as plausible. If the Court does not accept the cases by early next year, a ruling likely would not arrive until 2028 at the earliest.
The Court opened its new term on Monday, and prediction markets were not among its first listed cases. Although the justices have given no indication that they will hear the matter, Wallach said the contrasting legal approaches of the lower courts provide solid grounds for review.
In his view, the Third Circuit relied on an expansive reading of statutory language, while the Sixth and Ninth Circuits analyzed sports contracts within the financial risk-management framework of commodities law.
The timeline depends partly on whether the Court considers the competing appeals together. New Jersey’s petition targets the Third Circuit ruling, while Robinhood and Crypto.com have asked the Court to review their Ninth Circuit loss to Nevada. Kalshi has not filed a petition of its own; instead, it asked the full Ninth Circuit to rehear the Nevada case.
According to Wallach, the filings by Robinhood and Crypto.com, together with Kalshi’s request for more time to respond to New Jersey’s petition, could help bring the proceedings into alignment. A joint review would give the justices competing interpretations of the same federal law instead of a single ruling.
Rulemaking and rehearing could slow the clock
A federal rulemaking process could complicate that schedule. Wallach said the CFTC, which has maintained exclusive nationwide regulatory oversight, has urged courts to wait for new event-contract regulations.
He added that Robinhood’s Supreme Court filing argued against immediate review because those changes could materially alter the legal landscape.
The CFTC’s existing prohibition on gaming contracts served as one basis for the Ninth Circuit’s ruling, and the court said that proposed regulatory changes carried no legal effect while the current rule stayed in place.
Kalshi has argued that the disagreement turns partly on a regulation that the agency is in the process of rewriting. Wallach said rules that specifically address sports contracts could help the platforms’ case, but he maintained that new regulations would not necessarily resolve the larger question of whether Congress authorized these products to displace state gambling oversight.
Wallach estimated that the states have a 70%–80% chance of prevailing at the Supreme Court, although he cautioned that momentum in the lower courts does not guarantee the outcome.
He pointed to New Jersey’s 2018 victory, which overturned the federal sports betting ban after a series of earlier defeats.