Thirty-nine state attorneys general and the District of Columbia, with Ohio in the lead, are asking the U.S. Supreme Court to settle whether sports-event contracts from companies such as Kalshi should be regulated as state gambling or as federally overseen financial products, according to PlayUSA. The bipartisan group is backing New Jersey's petition for review of an appellate ruling that favored Kalshi, arguing that leaving the issue unresolved would deepen a conflict between state and federal authority over sports wagering. The Supreme Court has not yet agreed to hear the case.
Why the states want review
The states contend that prediction-market sports contracts are wagers even if they are labeled as event contracts. In Ohio's filing, Attorney General Andy Wilson rejected the operators' claim that classic sports bets are not bets, saying state governments have regulated sports wagering from the country's early days. The coalition also points to its regulatory experience: states set age rules, operate self-exclusion programs, enforce consumer protections and monitor sports integrity, while also pursuing unlicensed operators. They warned that delaying a ruling would allow the federal-state regulatory dispute to escalate.
The split among appeals courts
New Jersey filed its petition in September after losing in the Third Circuit, which concluded the contracts likely count as swaps and that federal law probably overrides New Jersey's wagering statutes, according to Betting News. In related cases, the Ninth Circuit allowed Nevada to apply its gambling laws to sports-event contracts, while the Sixth Circuit allowed Ohio and Tennessee to do the same. Gaming regulator groups said that creates a situation in which the same product can be shielded from state rules in one circuit and subject to them in others. Kalshi has until November 9 to respond to New Jersey's petition, and the Supreme Court has not decided whether to hear the case.
Consumer protection and integrity arguments
State and international gaming regulators argue that commodities oversight does not provide the same safeguards as state gambling regulation. Those safeguards include age checks, self-exclusion, monitoring for risky gambling behavior, and access to operator records and betting data. Ben Haden, president of the International Association of Gaming Regulators, said in an amicus brief that prediction-market sports wagering can leave customers without the protections regulators provide under their jurisdictions' public policy. He also warned that underage players could access gambling freely, problem gamblers could lack proven harm-prevention tools or be targeted by operators, and sports integrity could be put at risk. The regulators added that sports-integrity monitoring depends on visibility across the betting market, and activity outside state systems could make suspicious patterns harder to spot.
Ohio enforcement and sports league split
On September 25, the Sixth Circuit found that Kalshi's event contracts on sporting events improperly bypassed Ohio's gaming statutes. In early October, the Ohio Casino Control Commission directed 10 prediction markets to halt sports contracts in the state, saying such gaming requires a commission license. That state-level enforcement sits within the broader dispute over whether event contracts belong under state gambling rules or federal commodities oversight. The NFL filed its own brief urging the Supreme Court to act, predicting that billions of dollars would be wagered on NFL games each season through prediction markets and warning that delay would increase consumer harm and integrity risk. Major League Baseball and the NHL have taken the opposite position, siding with operators such as Kalshi and Polymarket, according to PlayUSA.
What happens next
The high court is not required to take the case. If the justices grant review, arguments would likely be held next year. The dispute has also drawn attention in Congress, where Nevada lawmakers have introduced the Prediction Markets Are Gambling Act. The measure would leave sports gambling laws to the states and reserve the Commodity Futures Trading Commission for financial markets. The Ohio-led filing keeps the issue before the court.
