- 39 state attorneys General submitted an amicus brief to the U.S. Supreme Court urging the reexamination of a Third Circuit Appeals ruling
- The attorneys general point to split at circuit level regarding state and federal laws to regulate prediciton markets
- Amicus brief urges Supreme Court to take on the appeal and overturn the Third Circuit’s decision
A bipartisan coalition of 39 state attorneys general submitted an amicus brief to the U.S. Supreme Court this week in support of New Jersey’s recent petition for an appeal of its lawsuit against prediction market operator Kalshi.
Led by Ohio Attorney General Andy Wilson, the group submitted the amicus brief on Wednesday, noting that federal and state courts “are hopelessly confused and divided over an issue of immense importance: whether the Commodity Exchange Act preempts state sports-gambling laws.”
The amicus brief was filed in support of New Jersey Attorney General Jennifer Davenport’s recent writ of certiorari to the U.S. Supreme Court, appealing a U.S. Third Circuit’s ruling in favor of Kalshi and asking for an evaluation of whether or not states can regulate sports event contracts through their own gambling laws.
Does CEA Preempt State Law?
New Jersey’s filed writ of certiorari presents the following question to SCOTUS:
Whether the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act preempted States from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the Commodity Futures Trading Commission.
If the writ is accepted by SCOTUS – and typically only 1% are accepted by the court each year – it would only be the beginning of a process that likely would not see a ruling until sometime in 2027.
In their brief, the coalition describe “chaos nationwide” due to the inability of lower, district, and circuit courts to come to an agreement on who has the power to regulate this popular new event contract market.
The attorneys general believe, and say so in their brief, that “gambling regulation falls withing the States’ traditional police powers.”
“The prediction markets are wrong. They cannot strip the States of their core sovereign power through relabeling and window-dressing. Our constitutional structure is much more durable than that. And the promise of federalism ensures that States do not lose their ability to protect their citizens so easily. Yet that is precisely what would happen under the prediction markets’ theory,” the coalition noted in its amicus brief.
The following state attorneys general signed the amicus brief:
- Steve Marshall, Alabama
- Kristin K. Mayes, Arizona
- Tim Griffin, Arkansas
- Rob Bonta, California
- Philip J. Weiser, Colorado
- William Tong, Connecticut
- Kathleen Jennings, Delaware
- Brian L. Schwalb, District of Columbia
- Anne E. Lopez, Hawaii
- Raul R. Labrador, Idaho
- Kwame Raoul, Illinois
- Brenna Bird, Iowa
- Kris Kobach, Kansas
- Liz Murrill, Louisiana
- Aaron M. Frey, Maine
- Anthony G. Brown, Maryland
- Andrea Joy Campbell, Massachusetts
- Dana Nessel, Michigan
- Keith Ellison, Minnesota
- Lynn Fitch, Mississippi
- Catherine L. Hanaway, Missouri
- Michael T. Hilgers, Nebraska
- Aaron D. Ford, Nevada
- John M. Formella, New Hampshire
- Raul Torrez, New Mexico
- Letitia James, New York
- Jeff Jackson, North Carolina
- Gentner Drummond, Oklahoma
- Dan Rayfield, Oregon
- David W. Sunday, Jr., Pennsylvania
- Peter F. Neronha, Rhode Island
- Alan Wilson, South Carolina
- Marty Jackley, South Dakota
- Derek E. Brown, Utah
- Charity R. Clark, Vermont
- Jay Jones, Virginia
- John B. McCuskey, West Virginia
- Josh Kaul, Wisconsin
- Keith G. Kautz, Wyoming
Split at Circuit Court of Appeal Level
Three Circuit Court of Appeals have weighed in on the state and prediction market fights.
Most recently, the U.S. Court of Appeals for the Sixth Circuit affirmed a denial of a Kalshi preliminary injunction motion in Ohio and reversed a granted preliminary injunction in Tennessee, as the prediction market company faces its latest setback in the court of appeals.
A three-judge panel for the U.S. Court of Appeals for the Sixth Circuit ruled Kalshi did not show that its sports event contracts satisfied the statutory definition of a swap, noting that the Commodity Exchange Act “neither expressly nor impliedly preempts Ohio’s or Tennessee’s gambling laws.” The decision affirmed the Southern District of Ohio’s denial of a preliminary injunction motion from Kalshi and vacates the Middle District of Tennessee’s entry of a preliminary injunction.
Kalshi has lost two of the three court of appeals rulings. A Ninth Circuit ruling this past August unanimously affirmed U.S. District Judge Andrew Gordon’s April 2025 decision to dissolve an approved Kalshi injunction against Nevada, allowing the Nevada Gaming Control Board to uphold its state gambling laws against sports event contracts.
The three-judge panel voted 3-0 to affirm Judge Gordon’s decision, noting that it disagreed with Kalshi’s overly broad reading of the CEA and ruled that its sports event contracts are likely sports bets.
The Sixth and Ninth Circuit decisions differed sharply from a U.S. Third Circuit Court of Appeals ruling from April, in which the court ruled New Jersey could not regulate Kalshi’s sports event contract offerings, as they reached the CEA’s definition of a swap.
Kalshi awaits one more Court of Appeals decision in the Fourth Circuit, in which the court is evaluating Kalshi’s appeal of a lower district court’s denial of a preliminary injunction in Maryland.
The post State AGs Ask SCOTUS to Hear Prediction Market Case appeared first on Sports Betting Dime.
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