Please Follow us on Gab, Minds, Telegram, Rumble, Truth Social, GETTR, X, Youtube, Instagram
Federal courts are increasingly becoming a battleground for the prediction markets industry. A number of different cases before various federal courts have, to date, reached seemingly contradictory conclusions on the fundamental question of whether the feds can require the states to treat sports betting contracts the same as they are treated elsewhere in the country.
The New York-based prediction market platform, Kalshi, has been fighting the battle in courts from Newark to Cincinnati. The company on Friday suffered another loss as a three-judge panel in the Sixth Circuit ruled that Ohio and Tennessee could enforce their respective gambling laws against the prediction market platform. The court was not convinced by the key arguments of Kalshi’s, that the commodities it sells are regulated by Washington D.C and therefore beyond the reach of state-based gaming laws.
The ruling, which likely will be appealed, is at odds with an earlier decision from the Third Circuit Court of Appeals regarding a dispute involving Kalshi and a New Jersey firm involved in an in-game fantasy sports contest. The Third Circuit likely would have found that Kalshi’s prediction contracts are subject to federal preemption in such a scenario.
The stakes for state attorneys general are far greater than the fate of one company. A federal preemption ruling would effectively strip states of their authority to regulate gambling markets and could eviscerate their attempts to collect taxes and enforce consumer protection laws on the gaming industry. This is the core of a formal brief filed by a group of state lawmakers at the Supreme Court this week. They urge the Court to grant review in order to resolve the conflict between the two lower courts.
The Supreme Court has the discretion to decide which cases to hear. The Court will be pressed to grant review to resolve the seeming conflict among the federal circuits of appeal. The company will likely file a petition for certiorari within several weeks.
