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State of Play’s TL;DR
- States, tribes, and former Commodity Futures Trading Commission Chairman Gary Gensler are lining up against sports prediction markets just as the CFTC rolls out proposed sports-event contract rules.
- This is shaping into a national fight over who gets to draw the line between financial trading and gambling.
The Commodity Futures Trading Commission (CFTC) published a proposed rulebook for event contracts on prediction markets that took a broadly permissive stance on sports trading. At nearly the same time, a wave of amicus briefs landed in courts arguing the opposite direction.
In the Sixth Circuit case tied to Ohio, 39 states plus Washington, D.C. filed to support Ohio. A group of 40 states, led by Nevada Attorney General Aaron Ford and Utah Attorney General Derek Brown, submitted an amicus brief on June 11 arguing that claims of federal pre-emption rest on an unrealistic premise. Their position was blunt: “Congress did not sneak sports gambling pre-emption into the Dodd-Frank Act.”
Tribal interests also weighed in. Thirty Indian tribes and 11 tribal associations, including the Indian Gaming Association, filed an amicus brief in the Ohio-related case. They argued that CFTC regulation of sports betting through prediction markets would “undermine decades of federal law” and pose an “existential” threat to tribal economy and sovereignty.
Gensler filed his own brief rejecting the idea that Congress intended to give the CFTC federal power over gaming. Meanwhile, the CFTC filed a submission in support of Kalshi.
Tribes form coalition
This fight matters because it could help define whether sports prediction markets are treated more like regulated trading products or more like gambling subject to state-by-state rules.
For states, the concern is clear: If federal law is read broadly enough, prediction markets could sidestep gaming laws that already govern sports betting.
For tribes, the stakes may be even higher. A separate coalition of tribal interests filed an amicus brief in the CFTC’s lawsuit against New York state authorities, arguing that the agency’s theory would “undermine the Tribal-State Gaming Compacts between the New York tribes and the state.”
That coalition includes the Indian Gaming Association, the National Congress of American Indians, the California Nations Indian Gaming Association, and 30 federally recognized tribes, including the Seminole Tribe.
For operators such as Kalshi, the cases could shape how far sports-related event contracts can expand. For bettors, the outcome may influence what kinds of sports markets are available and which regulators have the final say.
What’s next?
The Sixth Circuit is a key venue because the Ohio and Tennessee cases produced conflicting rulings on Kalshi’s requests for injunctions. A judge in Tennessee allowed Kalshi to continue operating in the state while that case moved forward, while a judge in Ohio denied the company’s request.
Combined oral arguments are scheduled for July 30, though the CFTC will not be there.
Beyond that, the New York case remains another front in the same broader dispute. The next big markers for the industry are the Sixth Circuit’s eventual ruling and whether the CFTC finalizes its proposed event-contract rules in their current form. Either way, states and tribes have made one thing clear: they do not plan to sit this round out.
Based on reporting by Tom Nightingale for SBC Americas.
