One of several ongoing legal cases involving Kalshi has drawn amicus briefs from a broad range of stakeholders, in opposition to the predictions market operator.
The case, now before the US Court of Appeals for the Third Circuit, pits Kalshi’s position — that its event contracts fall under federal commodities law — against state governments which argue the platform offers unlicensed sports betting under another name.
The conflict began when Kalshi filed a lawsuit in district court seeking to prevent New Jersey, one of the defendants in this case, from enforcing a cease-and-desist letter that targeted its sports-based event contracts.
Although Kalshi has initiated multiple lawsuits against states and their gaming regulators, this marks the first to reach the appellate level, prompting an influx of amicus briefs due to its broader legal implications.
The American Gaming Association (AGA) and a coalition of 34 state attorneys general — alongside the District of Columbia, Northern Mariana Islands, and several tribal organisations — have submitted briefs opposing Kalshi’s legal argument.
Also filing amicus briefs are organisations including New Finance Institute, Stop Predatory Gambling, Texans Against Gambling, the Association of American Physicians and Surgeons and the Casino Association of New Jersey.
These filings stress the potential consequences of allowing the Commodity Futures Trading Commission (CFTC) to effectively regulate sports wagering through events contracts, a mechanism Kalshi claims is distinct from traditional gambling.
The AGA, representing the commercial US gaming industry, expressed deep concerns about what it considers a disruptive regulatory overreach.
It argued that Kalshi’s model undermines the integrity and stability of state-based regulatory frameworks for sports betting, which were established following the Supreme Court’s 2018 decision in Murphy v. NCAA.
That ruling invalidated the Professional and Amateur Sports Protection Act (PASPA), giving states the autonomy to legalise and regulate sports betting.
AGA: CFTC lacks right expertise
According to the AGA, the CFTC lacks the expertise, infrastructure, and enforcement tools necessary to oversee complex sports betting markets.
The association argued that effective oversight of such markets requires deep regulatory experience and resources that state regulators possess, but the CFTC does not.
The group of 34 states aligned with New Jersey includes jurisdictions with divergent views on gambling.
Some, like New York and Michigan, have robust online sports betting industries. Others, including Utah and Idaho, have no legal forms of commercial gambling.
Regardless of these differences, all the states involved argued that Kalshi’s interpretation of federal law would significantly encroach on their longstanding authority to regulate gambling activity.
Their amicus brief contends that Kalshi’s contracts are, in substance, sports bets being marketed as commodity trades to bypass state gambling laws.
They assert that Kalshi’s reading of the Commodity Exchange Act (CEA), which it claims gives the CFTC exclusive regulatory authority, would effectively strip states of their powers to police the sports betting sector.
Tribal nations have also joined the opposition, voicing concerns that Kalshi’s model could undercut tribal sovereignty and the financial foundations of tribal gaming operations.
In their joint brief, tribal entities argued that Kalshi’s contracts infringe upon the Indian Gaming Regulatory Act (IGRA) and existing tribal-state compacts.
They maintained that Kalshi’s classification of sports betting as a commodity market is a mischaracterisation, designed to avoid both federal gaming law and tribal regulatory authority.
The tribal brief further argued that even under the CEA, Kalshi’s sports-related event contracts are either explicitly prohibited or fall outside the scope of legitimate commodity derivatives.
According to tribal leaders, permitting Kalshi to continue operating in this manner would harm both the economic well-being of tribal communities and the regulatory structures established under federal law.
Kalshi CEO remains defiant
Kalshi CEO Tarek Mansour has previously framed the regulatory opposition as an attempt at censorship.
In a March post on social media, he stated that authorities were trying to “censor” prediction markets, a characterisation state officials have rejected as misleading.
The crux of the legal dispute lies in whether Kalshi’s event contracts constitute a form of protected market speculation, or are simply unlicensed sports bets operating under a different name.
Kalshi is still putting together its presentation for the courts. The company had already requested more time before the briefs were filed, and the judge, in an order from 16 June, gave it until 24 July to deliver its presentation.