Controversy Surrounds Kalshi’s Entry into Sports Betting
As of late Tuesday, the spotlight turned sharply on Kalshi, the New York-based prediction market, amidst a fierce legal contest over its involvement in the sports betting sector. The US Court of Appeals for the Third Circuit witnessed a robust gathering of stakeholders rallying to challenge Kalshi’s initiatives.
Over the course of two days, multiple amicus briefs emerged, championing New Jersey’s legal challenge against Kalshi, which has temporarily operated within the state due to a preliminary injunction from a cease-and-desist order issued in March.
The briefs filed in support of New Jersey’s case were notable for their diversity and included:
- A coalition of anti-gambling advocates, comprising organizations such as Stop Predatory Gambling and Texans Against Gambling.
- A collective of tribal groups, featuring nine organizations and around 60 individual tribes.
- A joint brief from the attorneys general of 34 states, Washington, DC, and the Northern Mariana Islands.
- The Casino Association of New Jersey.
- The American Gaming Association (AGA).
This legal saga represents a pivotal moment for prediction markets, as it unfolds at a time when regulatory frameworks are being critically examined, especially in light of a previous appeal involving election betting that the Commodity Futures Trading Commission (CFTC) eventually dropped.
States Rally for Autonomy
The coalition of states filing a brief was spearheaded by Nevada’s Attorney General Aaron Ford and Ohio’s Attorney General Dave Yost. Kalshi’s troubles extend beyond New Jersey into lawsuits in Maryland, with Ohio issuing cease-and-desist orders but so far refraining from litigation.
The states involved reflect a broad spectrum of the American gaming landscape, with some like Utah and Hawaii devoid of legalized gaming, juxtaposed against significant markets such as New York and Illinois. Their argument centers on states’ rights to govern their own gambling laws—principles upheld by the Supreme Court’s 2018 decision to abolish PASPA.
The messaging is poignant: “Online sports betting may be enjoyable for many, yet it wields transformative effects for others,” the brief underscores, pointing to the necessity for state regulation to protect vulnerable populations.
Tribal Voices Emerge
The tribal factions represented in this brief bring a significant element to the debate. This development marks a crucial entry for tribal interests into the legal conversation surrounding prediction markets, an arena they had previously addressed through public comments to the CFTC.
In their filing, tribal representatives voiced concerns over how Kalshi’s market strategies infringe on tribal sovereignty and their rights to govern gaming within their territories. “Kalshi’s actions disrupt our revenue streams and challenge the agreements we have established,” they stated, emphasizing that the platform’s maneuvering complicates the regulatory landscape they operate within.
Industry Voices Raise Red Flags
Both the AGA and the Casino Association of New Jersey, though differing in approach, underscored the potential ramifications for their respective stakeholders. New Jersey’s casino association highlighted the serious consequences if Kalshi were to triumph in court, asserting that such an outcome could pave the way for federal overreach that endangers state regulations.
On a national scale, the AGA expressed reservations about the CFTC’s ability to adequately oversee sports betting, suggesting that state governments possess the expertise necessary for effective management, which could potentially be compromised by Kalshi’s disruptiveness.
Unexpected Allies Unite
The unexpected alliance of anti-gambling groups showcased how prediction markets have the power to unify previously disparate factions in legal opposition. Notable among these is the Association of American Physicians and Surgeons, whose members contend that increasing commercial gambling could lead to significant public health concerns.
Their brief warns, “The public interest significantly favors removing the preliminary injunction granted to Kalshi—this oversight must account for the dire consequences of unregulated gambling, including alarmingly high suicide rates among vulnerable gamblers.”
A Pivotal Year for Kalshi
Amidst the ongoing legal battles, Kalshi has experienced a tumultuous yet pivotal 2025. The company’s controversial ties to political figures like Donald Trump Jr. have surfaced, as have its connections to regulatory debates involving high-profile names such as Elon Musk.
As the calendar marches forward, Kalshi insists on its compliance with CFTC regulations, underscoring the scrutiny under which it operates. “We remain committed to functioning within the frameworks established by our federal overseers,” a spokesperson asserted.
Overall, the unfolding drama of Kalshi, marked by courtroom confrontations and the intertwining of industry interests and political machinations, is a testament to the complexities at play in the expanding realm of sports betting and prediction markets.