Gaming regulators from the United States and abroad have intensified efforts to bring the legal battle over Kalshi’s sports event contracts before the U.S. Supreme Court, arguing that conflicting federal court rulings have created uncertainty for gambling oversight, consumer protections and tribal gaming rights.

The International Association of Gaming Regulators (IAGR) and the North American Gaming Regulators Association (NAGRA) submitted a joint amicus brief (pdf) on October 2 in support of New Jersey’s petition in Flaherty v. KalshiEX. The filing asks the Supreme Court to determine whether sports-related event contracts listed on Commodity Futures Trading Commission (CFTC)-regulated exchanges fall outside the reach of state gambling laws under the Commodity Exchange Act (CEA).

The case has become a focal point in the broader debate over prediction markets, which have expanded rapidly in recent years and increasingly overlap with areas traditionally regulated as sports betting.

“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 brief states according to SBC News.

The regulators’ filing marks the second amicus brief backing New Jersey’s request for Supreme Court review. The National Council of Legislators from Gaming States previously filed its own supporting brief in September.

Regulators Seek Clarity on Oversight Powers

At the center of the dispute is a growing split among federal appellate courts regarding whether federal derivatives law overrides state gambling regulations when sports wagers are structured as event contracts and traded on federally registered exchanges.

The Third Circuit ruled in April that Kalshi’s contracts are likely swaps and that federal law likely preempts New Jersey’s sports wagering restrictions. Other appellate courts have reached different conclusions.

In August, the Ninth Circuit determined that Nevada’s gambling laws could apply to sports event contracts offered through prediction markets. The same court later sided with tribal interests seeking to block such contracts on tribal lands. In September, the Sixth Circuit allowed Ohio and Tennessee to enforce their gambling laws against sports event contracts and concluded that state laws would not be preempted even if the contracts qualified as swaps.

Additional cases remain pending. Maryland’s challenge awaits a ruling from the Fourth Circuit following oral arguments in May, while New York’s appeal is still before the Second Circuit.

According to IAGR and NAGRA, additional appellate decisions are unlikely to resolve the disagreement. The brief argues that more circuit rulings “will not produce uniformity.” Instead, they will add to the number of jurisdictions operating under conflicting rules.

Ben Haden, President of IAGR, said regulators require legal certainty regarding their authority and responsibilities. The organizations maintain that legislatures establish the legal framework governing gambling activities, while regulators implement those policies through licensing, supervision and enforcement measures.

Consumer Protection and Tribal Concerns Highlighted

A substantial portion of the regulators’ submission focuses on the functions gaming regulators perform and the consequences of losing oversight over sports-related prediction markets.

The brief highlights responsibilities including licensing reviews, approval of wager types, integrity monitoring, age-verification requirements, self-exclusion programs, prohibited-participant rules, record access and enforcement actions against unauthorized operators. The filing draws examples from regulatory frameworks in states including Ohio, Illinois, Massachusetts, Tennessee, Nevada, New Jersey and Colorado.

Haden warned that prediction markets operating beyond established gambling oversight frameworks could weaken existing safeguards.

“IAGR is concerned that sports wagering offered through prediction markets leaves consumers without the protection gaming regulators provide pursuant to public policy established in their jurisdiction,” said Haden. “Our brief challenges the claim that offering a sports wager as an event contract exempts it from state gambling laws.”

The brief also emphasizes concerns about sports integrity monitoring. Regulators argue that effective oversight depends on visibility into betting activity across the market and that wagering activity outside traditional regulatory systems may limit efforts to identify suspicious betting patterns or manipulation.

Tribal gaming issues also feature prominently in the filing. NAGRA represents tribal gaming regulators, and the brief notes that sports betting is classified as Class III gaming under the Indian Gaming Regulatory Act (IGRA). The organizations argue that if sports event contracts can be offered outside tribal-state gaming agreements while targeting the same consumers, tribal regulators could lose their ability to enforce negotiated rights and protections.

Prediction Markets Create Divisions in Tribal Communities

While many tribal organizations have opposed prediction markets, some tribes have begun partnering with Kalshi. Four tribes in California and Oklahoma recently launched prediction market applications backed by the company. Among them is the Kletsel Dehe Wintun Nation in northern California.

Eric Wright, administrator for the tribe, believes the new venture could provide funding for critical infrastructure needs. The reservation currently lacks potable drinking water, and Wright hopes revenue generated through the Kalshi partnership can support water-related projects.

The move has highlighted divisions within Indian country. A small number of tribes have embraced prediction markets as a potential source of economic development, while many others remain strongly opposed.

Hundreds of tribes argue that companies such as Kalshi and Polymarket are infringing on gaming rights that have long supported tribal economies through casino operations. Tribal groups have pursued legal action seeking to block sports prediction markets, which account for more than 80% of the sector’s activity.

The Supreme Court has not yet indicated whether it will hear New Jersey’s appeal. The Court opened its new term this week and did not include prediction market cases among its initial matters for consideration.

Separate petitions remain pending. Robinhood and Crypto.com have also asked the Supreme Court to review the Ninth Circuit’s ruling involving Nevada, while Kalshi has requested an en banc rehearing before the full Ninth Circuit rather than filing its own Supreme Court petition.