Lawmakers Say US Supreme Court Ought to Weigh In on Prediction Markets

The time for sitting by has come to an end; this is the message the NCLGS has sent to the Supreme Court of the United States. The National Council of Legislators from Gaming States is strongly suggesting that enough is enough and that prediction markets that offer event contracts on sports and states attacking the former, will have to finally get a ruling from SCOTUS. NCLGS Call on SCOTUS to Intervene in Prediction Market Debate Several reports suggest that lawmakers from the NCLGS have already filed an amicus brief earlier in the week, backing New Jersey Attorney General Jennifer Davenport, who has sought a petition for a writ of “certiorari” that specifically asks the Supreme Court to get involved in the legal tug-of-war with Kalshi played out in the Garden State. The arguments are painfully familiar. On the one hand, Kalshi argues that it is regulated under the Commodity Futures Trading Commission (CFTC) and therefore is not subject to state gaming laws. However, gaming regulators and attorneys general insist that event contracts are essentially a form of gambling. The petition sent by lawmakers did not directly address whether the CFTC had jurisdiction in the matter, but rather argued that state authorities should have control over gaming-related matters, a term used more broadly as the exact status of prediction markets is being hashed out. The amicus brief specifically argues that the Supreme Court should not rule in a way that prohibits states from intervening in products such as sports event contracts. Otherwise, the results would be “substantial harm and confusion.” The brief, however, does acknowledge that certain contracts traded on federally regulated exchanges would still be subject to the CFTC’s jurisdiction. The core clash comes from whether sports event contracts are part of these same markets. Intervene – But Consider the Consequences The authors of the brief also warn SCOTUS about the knock-on effect a ruling in favor of Kalshi would have. In other words, casinos and pari-mutuel businesses may restructure their businesses to enjoy the same legal treatment, which could lead to a decline in federal and state tax revenue. The writ of certiorari is part of an appeal that comes after an earlier decision from the US Court of Appeals for the Third Circuit. The matter will now rest with the Supreme Court, and a final decision will depend on how the Court treats the relationship between state gaming regulators and federal preemption. Whatever the Court does decide, it would have a wider impact on the current debate surrounding prediction markets, and specifically, sports event contracts, which are an essential part of their business strategy today.