Finance23 September, 20263 min read
NFL Backs New Jersey Officials Seeking Supreme Court Review Of Kalshi Prediction Markets
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NFL filed amicus brief urging SCOTUS to review Kalshi case, backing state regulation. Sixth Circuit ruling allowing states to regulate Kalshi sports contracts intensifies SCOTUS split.
NFL backs Supreme Court
The National Football League backed New Jersey officials’ request for U.S. Supreme Court review of a dispute over whether federal regulators or states should oversee sports-related prediction-market contracts, arguing the Commodity Futures Trading Commission may lack resources to adequately police sports betting.
The NFL told Reuters that it was urging the court to resolve a split among lower courts over whether the CFTC or state regulators have authority over prediction markets, and the league said it was “unclear if the Commission has the resources or staff to adequately regulate sports betting.”
The NFL said it has urged the CFTC and prediction-market companies to adopt safeguards including restrictions on bets susceptible to manipulation, protections against betting by insiders and a minimum age of 21, and the league said “Neither the CFTC nor the prediction market companies themselves — despite our persistent urging — have banned categories of bets susceptible to manipulation or set a 21 age limit.”
The CFTC responded to Reuters by saying it had engaged with the NFL from the beginning, and the agency said it was “unfortunate the NFL declined to sign an MOU (Memorandum of Understanding) with the CFTC” that would have enabled information exchange to promote integrity and resilience.
Circuit split and stakes
The case has followed a September 25 ruling by the 6th U.S. Circuit Court of Appeals against prediction-market operator Kalshi, which held that Ohio and Tennessee can regulate its event contracts under their gambling laws.
Kalshi told Reuters that the ruling shows why a state-by-state patchwork does not work, saying “Markets can't operate when the rules change at every state line, which is why Congress created a single federal regulator with nationwide rules.”
The NFL’s position also tied to the broader legal fight over whether the Commodity Exchange Act preempts state sports-gambling laws, and RG.org quoted the states’ brief telling the court 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.”
RG.org reported that New Jersey filed its petition Sept. 2 asking the Supreme Court to review an April 6 decision by the U.S. Court of Appeals for the Third Circuit, and it said Kalshi’s response is due Nov. 9 after the court granted a 30-day extension Sept. 22.
Who backs New Jersey
A coalition of 39 states and the District of Columbia urged the U.S. Supreme Court to take up New Jersey’s appeal, and RG.org said the amicus brief argued that only the justices can settle whether federal commodities law stops states from regulating sports wagers offered on prediction markets.
RG.org reported that the lead petitioner is Mary Jo Flaherty, interim director of the New Jersey Division of Gaming Enforcement, and it said the petition asks whether the 2010 Dodd-Frank Act preempted states from regulating sports bets placed within their borders when those bets are offered on CFTC-registered markets.
The NFL’s brief aligned with New Jersey’s argument that the Supreme Court should resolve the disagreement in lower courts, and Reuters quoted the NFL spokesperson saying the league was joining “many voices to encourage the Court to take this opportunity, now, to resolve the disagreement in the lower courts about who should regulate prediction markets — the CFTC or the states.”
CoinDesk reported that Kalshi spokesperson Elisabeth Diana said, “We have consistently tried to engage proactively and constructively with the NFL to collaborate on market integrity with no response,” and the same CoinDesk account said Kalshi pointed to partnerships with Major League Baseball and the National Hockey League while the NFL stood apart.