American Gaming Association Supports New Jersey SCOTUS Petition

• The American Gaming Association submitted an amicus curiae brief to the U.S. Supreme Court
• The brief supports New Jersey’s petition to the U.S. Supreme Court regarding event contracts
• Association describes Third Circuit ruling in favor of Kalshi as “disruptive”

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The American Gaming Association has filed an amicus curiae brief with the U.S. Supreme Court supporting New Jersey’s petition to reexamine a U.S. Third Circuit’s ruling in favor of Kalshi that prohibits the state from enforcing its gaming laws against sports event contracts.

The American Gaming Association (AGA) described the circuit court’s decision as “disruptive” and reported there is “no credible evidence that Congress designed Dodd-Frank to have that destabilizing effect.”

“The Third Circuit’s decision embracing Kalshi’s novel legal theory allows prediction markets to circumvent policy choices that states have made regarding sports betting, including laws that protect minors, provide responsible-gaming safeguards, regulate advertising, and limit wagers on college sports. Allowing the Third Circuit’s decision to stand would override those choices and impose serious harms on licensed operators, tribes, and consumers each day that prediction markets can offer unlicensed sports bets. That dynamic increases the urgency for the court to grant certiorari and decide the case at the earliest opportunity,” AGA counsel reported in its brief.

Reevaluating Third Circuit Decision

The AGA filed its amicus curiae brief in support of New Jersey Attorney General Jennifer Davenport’s recent writ of certiorari to the U.S. Supreme Court, which appeals a U.S. Third Circuit’s ruling in favor of Kalshi and asks for an evaluation of whether or not states can regulate sports event contracts through their own gambling laws.

New Jersey’s filed writ of certiorari presents the following question to SCOTUS:

Whether the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act preempted States from regulating sports bets that occur within their jurisdictions if those bets are offered on markets registered with the Commodity Futures Trading Commission.

If the writ is accepted by SCOTUS – and typically only 1% are accepted by the court each year – it would only be the beginning of a process that likely would not see a ruling until sometime in 2027.

The AGA has long maintained that prediction market sports event contracts are equivalent to sports betting, but with none of the required safeguards for customers, regulations, or tax revenue benefits for the states.

“AGA has a strong interest in orderly application of state and federal gaming laws, and its members have built their businesses around a framework in which state and tribal governments regulate sports betting. The Third Circuit’s decision upends that regime by allowing prediction markets to offer sports betting nationwide, without complying with state and tribal gaming laws,” AGA counsel wrote.

Congress never intended to authorize that “bifurcated scheme,” the AGA reported, which is inflicting “serious competitive harm on state- and tribal-licensed gaming operators.”

Amicus Curiae Briefs Piling Up

The AGA’s brief is one of several to be submitted to SCOTUS this week.

A bipartisan coalition of 39 state attorneys general submitted an amicus brief to the U.S. Supreme Court this week in support of New Jersey’s recent petition for an appeal of its lawsuit against prediction market operator Kalshi.

Led by Ohio Attorney General Andy Wilson, the group submitted the amicus brief on Wednesday, noting that federal and state courts “are hopelessly confused and divided over an issue of immense importance: whether the Commodity Exchange Act preempts state sports-gambling laws.”

In their brief, the coalition describe “chaos nationwide” due to the inability of lower, district, and circuit courts to come to an agreement on who has the power to regulate this popular new event contract market.

The attorneys general believe, and say so in their brief, that “gambling regulation falls withing the States’ traditional police powers.”

“The prediction markets are wrong. They cannot strip the States of their core sovereign power through relabeling and window-dressing. Our constitutional structure is much more durable than that. And the promise of federalism ensures that States do not lose their ability to protect their citizens so easily. Yet that is precisely what would happen under the prediction markets’ theory,” the coalition noted in its amicus brief.

The NFL also submitted a brief in support of New Jersey’s petition, noting that sports event contracts pose a threat to the league’s game integrity and it agrees with the Sixth and Ninth Circuit rulings that allow state gambling laws to regulate the markets.

Game integrity is fundamental to the NFL, counsel noted in the league’s amicus curiae brief to the U.S. Supreme Court. The league noted that prediction market operators have yet to instill the same safeguards for sports event contracts to protect game integrity as licensed sports betting operators have for their betting markets.

“Although the NFL, among others, has encouraged the Commission and the DCMs to adopt safeguards and rules for sports wagering like those in the state-regulated world of traditional LSBs, the Commission and DCMs so far have stuck to a more laissez-faire approach,” the league wrote.