Show of force
As a year dominated by sports betting scandals and prediction markets comes to an end, nearly two-score US states have finally rallied together to confront the existential threat posed by the latter.
On Christmas Eve, Nevada Attorney General Aaron D. Ford’s office took to X to state the AG was fronting a coalition of 37 states and D.C. in filing an amicus brief with Fourth Circuit Court of Appeals:
AG Ford and company filed the brief with the hopes of swaying a major legal battle involving prediction market operator Kalshi in the states’ favor.
That Ford filed the brief with the Fourth Circuit is significant because the court is currently reviewing a decision from a federal lawsuit filed by Kalshi that seeks to prevent Maryland gambling regulators from taking enforcement action against it offering prediction markets in the state.
Tried and trusted
Should Kalshi win, it would set a powerful legal precedent and potentially spell the end of state relevance in sports betting. The fact that so many states have joined forces with AG Ford, however, is a sign to Fourth Circuit judges that the whole of the US has a stake in the outcome.
While the likes of Kalshi, Robinhood, Underdog and other prediction markets got the jump on US states after forming a coalition in early December attacking state regulation, AG Ford’s coalition countered by asserting the states’ pedigree in regulating sports betting within their borders.
decades of protecting customers, preserving the integrity of sporting events”
“Nevada is the foundational home of sports wagering, and states, not federal financial regulators, have decades of protecting customers, preserving the integrity of sporting events,” the AG said on Christmas Eve.
Kalshi et al argue that because they are regulated by the federal Commodity Futures Trading Commission (CFTC), federal law should override state gambling laws.
Not going quietly
AG Ford and the coalition are countering with the argument that states have regulated gambling for decades, and that allowing Kalshi to win would create a “federal loophole.”
This legal rabbit hole would purportedly allow betting firms to bypass state-level consumer protections, age verification, and tax requirements “by labeling gambling as financial trading.”
The Nevada AG added he was leading the coalition “to make clear that Congress did not quietly take away state’s authority to regulate sports wagering.
