Gambling regulators back Supreme Court intervention in Kalshi fight
Two major gambling regulatory organisations have asked the US Supreme Court to take up the legal battle over whether sports prediction markets can operate outside state gambling laws.
The International Association of Gaming Regulators and North American Gaming Regulators Association have backed New Jersey’s attempt to have the country’s highest court review its dispute with Kalshi.
At the centre of the case is whether sports event contracts offered through federally regulated prediction markets are exclusively governed by federal commodities law or can also be restricted under state gambling legislation.
Kalshi operates as a designated contract market regulated by the Commodity Futures Trading Commission and argues that the federal Commodity Exchange Act pre-empts state gambling laws applying to its event contracts.
States including New Jersey and Michigan contend that sports contracts effectively replicate sports betting and should therefore be subject to their gambling licensing regimes.
The issue has become increasingly important as different US courts reach different conclusions.
Federal courts have produced conflicting decisions over whether states can enforce gambling laws against prediction-market operators, increasing pressure for a definitive ruling on where federal commodities regulation ends and state gambling authority begins.
The regulators’ intervention comes as individual states continue taking direct action.
Michigan announced this week that Coinbase had agreed to stop offering new sports event contracts in the state, joining Robinhood and Kalshi in restricting or withdrawing the products while litigation continues.
For regulated betting sites, the eventual outcome could be significant.
Traditional sports betting operators must obtain individual state licences, pay state gambling taxes and comply with local responsible-gambling, advertising and integrity rules.
Prediction markets have instead attempted to offer sports contracts nationally through the federal commodities framework.
A Supreme Court ruling could therefore determine whether that parallel model can continue or whether states can force sports prediction products into their existing regulated betting systems.
