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- Pennsylvania Attorney General Dave Sunday has joined a 39-state coalition petitioning the U.S. Supreme Court to step in and affirm that states retain the authority to regulate prediction markets like Kalshi under their traditional gambling frameworks.
- The multi-state push attempts to resolve a deepening federal circuit court split over whether sports-related event contracts are federally regulated derivatives under the CFTC’s jurisdiction or state-regulated sports betting products.
Pennsylvania Attorney General Dave Sunday has joined a 39-state coalition asking the U.S. Supreme Court to decide whether states can regulate prediction markets such as Kalshi.
The dispute matters to gambling regulators because it could determine whether sports-related prediction market contracts are treated more like federally regulated derivatives or state-regulated sports betting. Sunday said Pennsylvania and other states should keep authority to police products they view as gambling.
Coalition argues prediction markets belong under state gambling oversight
In a statement, Sunday said, “Historically, the law has given states the purview to oversee gambling in their jurisdictions, and prediction markets should be subjected to that same oversight.” He added, “We are asking the nation’s highest court to provide that same deference to the states.”
Sunday also said, “It is our position that sports-related prediction markets should be viewed under the law as sports betting.”
According to the source report, the multi-state effort follows conflicting federal appellate decisions over who has authority to regulate these markets. Kalshi operates a platform where users buy and sell contracts tied to the outcomes of events, and it added sports-related contracts last year.
Conflicting circuit rulings have raised the stakes
The U.S. Court of Appeals for the Third Circuit ruled in April that the Commodity Futures Trading Commission has “exclusive” jurisdiction over Kalshi’s contracts, limiting states’ ability to enforce gambling laws against them.
But the Sixth and Ninth Circuits ruled in September that states may regulate prediction markets if the contracts “function as gambling.” Those conflicting decisions have increased the chances that the Supreme Court could be asked to step in.
The ABC27 report said Sunday had previously joined Ohio and 36 other attorneys general in an amicus brief before the Third Circuit, along with similar efforts in the Sixth and Ninth Circuits.
What comes next
The immediate next step is whether the Supreme Court agrees to take up the issue. If it does, the case could help settle whether states can apply their gambling laws to prediction market products, especially sports-related contracts.
What remains unclear from the report is which states are included in the current 39-state coalition and how broadly any eventual ruling would apply to specific contract types offered by Kalshi.
Source: As reported by Kyle Morgan.
