Gaming Regulator Groups Urge the Supreme Court to Hear New Jersey's Kalshi Case

Two associations of gaming regulators have told the Supreme Court that the same Kalshi contract is shielded from state law in New Jersey and subject to it in Ohio, and that only the Court can end that. They follow a group of state lawmakers in backing New Jersey's petition; nobody has yet filed for Kalshi.

• The International Association of Gaming Regulators (IAGR) and the North American Gaming Regulators Association (NAGRA) submitted a joint amicus brief on 2 October asking the US Supreme Court to grant New Jersey's petition in Flaherty v. KalshiEX, No. 26-299
• The associations, which say they take no position for or against gaming, argue that the Third Circuit's ruling for Kalshi conflicts with the Sixth and Ninth Circuits, leaving licensing, age limits, self-exclusion and event approval enforceable in some states and not in others
• The National Council of Legislators from Gaming States (NCLGS) filed its own brief backing New Jersey on 22 September; both briefs were filed by the same counsel of record, Marc W. Dunbar of Jones Walker
• No amicus brief supporting Kalshi is on the docket, and Kalshi's response to the petition is due on 9 November after the clerk granted it a 30-day extension
• Courts keep diverging, with a Chicago judge blocking Illinois from licensing Kalshi a week after Ohio won in the Sixth Circuit

The Regulators Ask the Court to Settle Which Rules Apply

In a brief submitted on Friday 2 October, IAGR and NAGRA ask the Supreme Court to grant the petition that New Jersey Attorney General Jennifer Davenport and Mary Jo Flaherty, Interim Director of the New Jersey Division of Gaming Enforcement, filed on 2 September. The petition asks whether the 2010 Dodd-Frank 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". A divided Third Circuit panel held in April that it likely did.

The brief describes IAGR as representing "regulatory agencies and jurisdictions worldwide" and NAGRA as made up of the federal, state, local, tribal and provincial agencies "primarily responsible for the regulation of legalized gaming". Their stake, it says, is that their members license sports wagering operators and must, until the Court acts, enforce their laws "with the knowledge that a regulatory requirement held to be preempted in one member's jurisdiction remains enforceable in another".

The core is the circuit split. The Ninth Circuit ruled for Nevada on 28 August and on 16 September held Kalshi's sports contracts to be class III gaming in Blue Lake Rancheria; the Sixth Circuit followed on 25 September for Ohio and Tennessee. "These decisions cannot be reconciled," the brief says. "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 associations agree with New Jersey that the Sixth and Ninth Circuits have the better view, "but the more immediate concern for present purposes is the conflict itself, which only this Court can resolve". Further rulings from the Fourth and Second Circuits, where appeals are pending, will only "multiply the number of jurisdictions" under conflicting rules, they argue.

What Regulators Say the Split Puts in Doubt

Most of the brief catalogues the work it says is now in question, from approving wagering systems and events to enforcing age limits and self-exclusion at the point of the wager. Its example is Ohio, whose Casino Control Commission alleged in April that Kalshi offers sports wagering to people aged 18 to 20, runs a voluntary exclusion programme less extensive than Ohio law requires and offers wagers on events the commission has not approved, and said that without a licence it "lacks awareness of whether, or to what extent," Kalshi follows Ohio's safeguards.

Regulators outside the three circuits, the brief says, are "left to choose between two unsatisfactory courses": enforce and invite litigation, or defer and leave state law unenforced, and even one that does nothing "may be preemptively sued". The associations ask for review "so that the Associations' members, and the licensees and public they serve, may know which rules apply".

The NCLGS, an organisation of state lawmakers whose mission its brief says "is not inherently pro- or anti-gaming", makes a shorter states' rights case. It argues that if Kalshi's "self-described 'sports betting' activities" are beyond state reach, "casinos, pari-mutuel operators, and other heavily regulated entities are certain to amend their business and products to seek the same status", and that tribal compacts that traded sports betting exclusivity for payments, citing Connecticut, Florida and Washington, could be "potentially put into breach". Kalshi, represented by Neal Katyal of Milbank, won a move of its response deadline from 8 October to 9 November on 22 September, citing "other previously scheduled professional obligations".

The Associations Are Arguing the Split, Not the Merits

The brief is built for the test the Court applies at this stage, whether appeals courts conflict on an important federal question, and says in terms that it is not asking the Court to resolve the merits now. A regulators' association arguing the meaning of "swap" would be stepping into a commodities dispute it does not police; one telling the Court that its members cannot run licensing consistently is describing its own work, and the conflict it relies on is on the face of the opinions. The weakness is that a moving federal rulebook gives Kalshi an argument for waiting. It has asked the Ninth and Fourth Circuits to hold off until the CFTC finalises its revised rule on gaming contracts, and the agency has separately sent the White House a rule defining event contracts as swaps. Kalshi may well tell the Supreme Court the same.

The Support So Far Is One-Sided and Closely Linked

Both briefs on the docket back New Jersey, and both come from the same lawyers, with Dunbar as counsel of record and Marc Ellinger of Ellinger Bell on each. That does not weaken the arguments, but the support is narrower than two separate filings suggest. No state attorney general or tribe has filed at this stage, and nothing has been filed for Kalshi. Under Supreme Court Rule 37.2, briefs supporting a petitioner are due within 30 days of docketing, which for a case docketed on 8 September points to 8 October, so New Jersey's list may be close to final.

Another Season Will Be Played Under the Split

With Kalshi's response due on 9 November, and a petition ordinarily distributed to the justices no sooner than 14 days after a response, a decision on whether to hear the case looks unlikely before December, and a grant would ordinarily put argument in 2027. Meanwhile the map keeps fragmenting: Ohio has ordered 10 prediction markets to stop sports contracts, Nevada has called Kalshi's bid to wait for the CFTC "just another attempt at delay", and an Illinois judge has gone the other way. Every appellate ruling in the fight so far was made at the preliminary injunction stage.

The regulators have shown that the split is real and that they are carrying its cost. Whether the Court decides the answer is needed now, or should wait for the CFTC to finish rewriting the rules, will decide how long they carry it.