US Supreme Court Faces Rising Pressure to Hear Prediction Market Dispute

New Jersey’s appeal against prediction platform Kalshi has become the focal point for calls from 39 state attorneys general and Native American tribe representatives urging the Supreme Court to issue a definitive ruling regarding the increasingly contentious prediction markets. With conflicting rulings coming from individual states, the sector’s position is quickly becoming untenable. Conflicting Rulings Are Creating Confusion Attorneys general from 39 states and the District of Columbia, recently sent an amicus brief to SCOTUS, asking it to take up New Jersey’s case against Kalshi. The state seeks to overturn an appellate court ruling that treats prediction contracts as financial instruments regulated by the Commodity Futures Trading Commission (CFTC). This decision effectively means state regulators are powerless against prediction markets. The petition highlights conflicting rulings in different states. In August, the Ninth US Circuit Court of Appeals decisively sided with Nevada, allowing it to limit sports-related prediction contracts. Later in September, the Sixth Circuit ruled that Tennessee and Ohio could also apply their gambling regulations to platforms like Kalshi, contrasting the New Jersey judgment. Different courts also used conflicting reasoning to explain their decisions. The Ninth Circuit concluded that sports event contracts were not swaps, but Commodity Exchange Act preemption would otherwise apply. At the same time, the Third Circuit ruled that sports contracts were considered swaps, and the Sixth Circuit maintained that CEA preemption does not apply. Tribes and Other Organizations Are Also Getting Involved Tribes have also joined the fight. California’s Cabazon Band of Cahuilla Indians submitted a separate amicus brief, arguing that the Third Circuit’s ruling could deal irreparable damage to tribal gaming nationwide. Tribes argue that prediction platforms offering sports-related contracts on tribal lands violate the Indian Gaming Regulatory Act (IGRA) and ignore state compacts, potentially depriving local communities of critical revenue. The International Association of Gaming Regulators (IAGR) and the North American Gaming Regulators Association (NAGRA) also supported a Supreme Court intervention. They contend that a type of wager banned in one jurisdiction can later be reintroduced as a federally regulated derivative. These different standards can create unfair competition and undermine state regulations. Conflicting appellate decisions have created uncertainty as to whether regulators may apply state gambling laws to the same sports event contracts while related litigation is pending in other jurisdictions. IAGR and NAGRA statement Before the Supreme Court decides whether to take up the case, judges will likely first wait for Kalshi to respond to New Jersey’s petition. The operator has until early November to submit a response. Even if the Supreme Court takes up the case, there is no guarantee of a quick ruling. Experts believe a final decision is unlikely to come before early 2027, leaving prediction markets in an increasingly nebulous position.