Joint amicus brief highlights implications for state gambling laws, consumer safeguards and sports integrity
The International Association of Gaming Regulators (IAGR) and the North American Gaming Regulators Association (NAGRA) continue their efforts to support U.S. Supreme Court review in Flaherty v. KalshiEX, LLC. Working with members of the International Masters of Gaming Law (IMGL) who are serving as counsel to the Associations, their joint amicus brief addresses whether the Commodity Exchange Act preempts state gambling laws when sports wagers are offered as event contracts on exchanges registered with the Commodity Futures Trading Commission (CFTC).
The brief asks the Court to resolve conflicting appellate interpretations. In preliminary-injunction proceedings, the Third Circuit concluded that federal law likely preempts application of New Jersey’s sports-wagering laws to the challenged contracts. The Ninth Circuit reached a contrary conclusion concerning Nevada’s laws.
Before the Court’s 2018 decision in Murphy v. NCAA, the Professional and Amateur Sports Protection Act barred states from authorizing sports wagering, subject to limited exceptions. Murphy invalidated PASPA, allowing states to choose whether to authorize and regulate sports wagering or retain their existing prohibitions.
“IAGR is concerned that sports wagering offered through prediction markets leaves consumers without the protection gaming regulators provide pursuant to public policy established in their jurisdiction,” said Ben Haden, President of IAGR. “Our brief challenges the claim that offering a sports wager as an event contract exempts it from state gambling laws. Without the protection and oversight provided by gaming regulators, we are highlighting the risks of underage players being able to access gambling freely, problem gamblers being left without proven harm-prevention tools — or worse, being targeted by operators — and the integrity of sport being put at risk. Regulators need clarity about their authority to enforce proven safeguards and the limits their jurisdictions have placed on gambling. That is why IAGR is supporting this request for Supreme Court review.”
The brief explains that legislatures establish the boundaries of lawful gambling, including prohibition. Regulators implement those choices by approving specific events and wager types, restricting activities that pose unacceptable risks under the governing standards, supervising licensed operators, and taking enforcement action against unauthorized operators. It highlights minimum-age requirements, self-exclusion, prohibited-participant rules, access to records, and monitoring for suspicious betting. The brief also identifies consequences for tribal gaming regulation and enforcement.
IMGL counsel for the Associations argue that regulators must continue making supervisory and enforcement decisions while the courts disagree, giving the request for review immediate and consequential importance. The brief seeks clarity about the federal boundary while recognizing jurisdictions’ different choices about gambling.
“Our members are honored to be representing NAGRA and IAGR in this matter in the hopes of clearing up the significant uncertainty created by the conflicting federal court decisions which is upending more than a century of established state regulatory authority over gambling within state and tribal borders,” added Marc Dunbar, the current President of the International Masters of Gaming Law who is serving as counsel of record to the Associations.