A group of US state lawmakers has filed an amicus brief with the US Supreme Court, urging justices to weigh in on a case between prediction markets platform Kalshi and gaming authorities. On Tuesday, the National Council of Legislators from Gaming States (NCLGS) supported New Jersey’s Attorney General and gaming authorities’ petition for a writ of certiorari. The original petition, filed on Sept. 2, asks the nation’s highest court to consider New Jersey’s case against Kalshi, potentially resolving whether state authorities or federal agencies have jurisdiction over prediction market companies.
In its filing, the NCLGS argued that a ruling favoring Kalshi would render states powerless to regulate sports betting on prediction markets, causing substantial harm and confusion. The group asserted that gaming-related matters should be left to individual US state authorities, though the filing did not address the competing argument that event contracts traded on federally regulated markets fall under the CFTC’s exclusive jurisdiction. State lawmakers warned that if Kalshi’s activities are deemed beyond state regulation, casinos and other heavily regulated entities might seek similar status, forcing reconsideration of entire state regulatory regimes. The Supreme Court petition stems from an appeal following a decision from the US Court of Appeals for the Third Circuit. Kalshi has until Nov. 9 to file a brief stating its position, having previously stated it could not be regulated by 50 different regulators.
This legal maneuver highlights the intensifying conflict between state-level gambling oversight and federal commodity regulation regarding prediction markets. By intervening as amici curiae, legislators signal deep concern that a judicial endorsement of Kalshi’s federal preemption arguments could dismantle existing state frameworks for sports betting. The core tension lies in defining whether event contracts constitute commodities under CFTC authority or gambling activities subject to state police powers, a distinction with profound implications for market structure and tax revenue collection across jurisdictions.
The outcome will likely determine the operational landscape for crypto-adjacent financial products that blur traditional asset classes. If the Supreme Court accepts the case and rules in favor of state authority, platforms may face fragmented compliance requirements across fifty jurisdictions, increasing operational risk and limiting scalability. Conversely, a ruling favoring federal exclusivity could trigger a wave of regulatory arbitrage, where traditional gaming operators restructure offerings to bypass state controls, necessitating urgent legislative responses to preserve market integrity and consumer protection standards.
