States, tribes, and industry groups line up against Kalshi in high-stakes prediction market case
A sweeping coalition of states, tribes, industry groups, and anti-gambling advocates has filed legal briefs supporting New Jersey in its escalating court battle with prediction market operator Kalshi, marking the first appellate-level test of the controversial platform’s place in the U.S. gambling landscape.
Five separate amicus curiae briefs were submitted this week to the U.S. Court of Appeals for the Third Circuit, where New Jersey is challenging Kalshi’s use of event contracts tied to sports outcomes. Kalshi is currently operating in the state under a preliminary injunction after it contested a cease-and-desist order issued in March.
The parties backing New Jersey include a coalition of attorneys general from 34 states, tribal gaming entities representing 60 tribes, the Casino Association of New Jersey, the American Gaming Association (AGA), and a group of anti-gambling organizations.
“The amici are doing exactly what they’re supposed to: explaining the importance of this case,” said gaming attorney Andrew Kim. “Unlike judges in the district courts, the Third Circuit has a more complete picture of the seismic regulatory upheaval Kalshi’s legal position would unleash.”
In one of the most comprehensive filings, the coalition of state attorneys general, led by Nevada’s Aaron Ford and Ohio’s Dave Yost, argued that Kalshi’s federally regulated operations under the Commodity Futures Trading Commission (CFTC) threaten state control over gambling, as established by the Supreme Court’s 2018 repeal of PASPA.
“Online sports betting, while convenient and entertaining for many, comes with life-altering consequences for some,” the brief reads. “Thus, depriving the States of the power to regulate naturally increases the dangers to a vulnerable population of citizens.”
Also filing for the first time in the prediction market debate, tribal nations warned Kalshi’s operations could undermine Class III gaming compacts and infringe on tribal sovereignty.
“Kalshi’s unlawful and unfair entrance into the gaming market has adversely impacted tribal gaming revenue,” the tribes wrote. “Additionally… Kalshi impedes tribes’ inherent sovereign right to regulate gaming activity on Indian lands.”
Commercial operators also expressed alarm. The Casino Association of New Jersey warned Kalshi’s regulatory structure could marginalize state-based casino oversight.
“Kalshi’s suit is thus not just an effort to circumvent New Jersey law. It is a stalking horse for Kalshi to displace state regulators while crushing competitors,” the group said.
The AGA raised concerns about the CFTC’s capability to supervise complex wagering systems.
A coalition of anti-gambling groups, including the Association of American Physicians and Surgeons, issued an emotionally charged filing, citing gambling addiction and suicide risks.
“The rate of suicide by gamblers is 15 times the overall population,” the brief stated. “The public interest is strongly against the preliminary injunction… The district court devoted merely one cursory sentence to this factor, considering the immense public harm to be inflicted by unregulated commercialised gambling.”
Kalshi defended its legal standing in a statement to InGame, asserting that its platform is “highly regulated” at the federal level.
“Kalshi is regulated at the federal level by the Commodity Futures Trading Commission, and we will continue to operate under their jurisdiction," the spokesperson said. “A cursory review of the facts shows that Kalshi is highly regulated under a set of laws and regulations deeply concerned with fairness and safety.”
The legal escalation comes amid political entanglements. Kalshi hired Donald Trump Jr. as an advisor in January. Its former legal chief, Eliezer Mishory, now heads the SEC’s Government Efficiency unit, once led by Elon Musk. A brief partnership between Kalshi and Musk’s xAI unraveled within hours in May, and Musk’s platform X has since partnered with unregulated competitor Polymarket.
https://www.yogonet.com/international/news/2025/06/19/108713-states-tribes-and-industry-groups-line-up-against-kalshi-in-highstakes-prediction-market-case