A coalition of 38 states, the District of Columbia, and the National Football League have filed amicus curiae briefs supporting New Jersey’s petition to the U.S. Supreme Court, intensifying a legal battle over the regulation of sports-based event contracts. The case, Flaherty v. KalshiEX, centers on whether federal commodity laws protect sports event contracts traded on platforms like Kalshi from state-level gambling regulations.
The Supreme Court is currently facing a surge of filings ahead of the deadline for Kalshi to submit its response to the petition, which is set for November 9.
State and Regulatory Challenges to Kalshi
The legal conflict hinges on the jurisdictional reach of the Commodity Futures Trading Commission (CFTC). On October 2, the International Association of Gaming Regulators (IAGR) and the North American Gaming Regulators Association (NAGRA) filed a joint brief arguing that current judicial interpretations have created inconsistent regulations. According to the regulators, the same product offered by the same entity is shielded from state authority in the Third Circuit’s jurisdiction, while remaining subject to it in the Sixth and Ninth Circuits.
Ohio led a separate group of 38 states and the District of Columbia in a filing on October 7, characterizing the current state of federal and state law as “desperately confused and divided.” The coalition argues that prediction markets cannot bypass core state sovereign powers through rebranding or superficial changes. Among the states signing the brief are Alabama, California, Michigan, Nevada, New York, and Pennsylvania. Texas and Florida did not join the filing.
NFL Concerns Over Market Integrity
The National Football League submitted its own brief on October 8, represented by former U.S. Attorney General William Barr. The league highlighted the scale of financial activity tied to its games, noting that $1.8 billion of the $3.3 billion traded on prediction markets during the first Sunday of the NFL season was directly related to league events.
The NFL stated that it had previously requested both the CFTC and exchange operators like Kalshi to implement a 21-year age minimum and to ban betting markets that are easily manipulated by a single individual. The league reported that these requests were denied and urged the Supreme Court to intervene before the conclusion of the next NFL season.
Court Rulings on Kalshi Contracts Remain Inconsistent
Lower court rulings on the legality of these contracts have been inconsistent. In April, the Third Circuit Court of Appeals ruled in favor of Kalshi, whereas the Ninth and Sixth Circuits have issued rulings unfavorable to the company. On October 2, the same day regulators filed their brief, a federal judge in Chicago granted a partial victory to Kalshi in a case involving the state of Illinois.
The debate has also drawn attention to the role of former lawmakers in the industry. The New Jersey petition cites a 2010 Senate floor statement by then-Senator Blanche Lincoln, who warned that structuring “event contracts” around sports games would facilitate gambling. Federal lobbying disclosures reveal that the Lincoln Policy Group, which registered Lincoln as a lobbyist, has reported $480,000 in lobbying income from Kalshi since 2024. Lincoln also signed a separate amicus brief supporting Kalshi in the Third Circuit.
Kalshi Awaits Supreme Court Decision on Petition
While interest in the Supreme Court case remains high, market activity for year-end sports contracts has been relatively low, with approximately $24,000 in trading volume. Kalshi’s broader strategy relies on the pending status of the CFTC’s proposed gambling regulation amendments. Internal data released by the exchange indicates that its 15-minute gold futures market saw higher volume in September than its Ethereum futures market.
The Supreme Court is expected to review the response from Kalshi, which is due by November 9, to determine whether to grant the petition and hear the case during the current term.
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