State attorneys general expect the rapidly expanding legal battle over sports event prediction markets to reach the U.S. Supreme Court as early as 2027, with several officials saying an impending split among federal appeals courts makes the issue increasingly likely to land before the nation's highest court.
- State attorneys general expect the Supreme Court could hear the prediction market dispute as early as 2027 if conflicting federal appeals court rulings create a circuit split.
- Nevada officials argue sports event contracts remain subject to state gaming laws, while prediction market operators contend federal commodities law preempts state regulation.
- More than 40 state attorneys general have united behind preserving state authority over gambling regulation, licensing and consumer protections.
Speaking last week during a panel at the National Council of Legislators from Gaming States' summer meeting, attorneys general and senior state legal officials said a decision from the Ninth Circuit Court of Appeals in Nevada's case against Kalshi could create the type of circuit split that frequently prompts Supreme Court review.
"I think ... probably next term would be a very ripe time for that to take this on," West Virginia Attorney General JB McCuskey said. "With the amount of money that's going through this, I feel pretty confident that the Supreme Court's going to weigh in probably sometime in 2027."
Circuit split looming
The comments offer one of the clearest public timelines yet from state officials overseeing litigation against prediction market operators, which have become the most significant legal challenge facing the regulated U.S. sports betting industry since the Supreme Court struck down the federal sports wagering ban in 2018.
At the center of the dispute is whether federally regulated event contracts listed on Commodity Futures Trading Commission-regulated exchanges can be offered nationwide despite state gambling laws. Companies, including Kalshi, argue the Commodity Exchange Act preempts state gaming laws, while states contend sports event contracts constitute gambling subject to state licensing, taxation, and consumer protection requirements.
The legal landscape has become increasingly fragmented.
Kalshi secured a favorable ruling from the Third Circuit in its dispute with New Jersey, while Nevada officials argued before the Ninth Circuit earlier this year that the state's gaming laws remain enforceable. Additional cases are pending in the Fourth and Sixth Circuits, creating the possibility of conflicting appellate decisions.
Craig Newby, first assistant attorney general for Nevada, said that if the Ninth Circuit rules differently than the Third Circuit, it leaves the Supreme Court to resolve questions surrounding federal preemption and state regulatory authority.
Enjoying Covers content? Add us as a preferred source on your Google account"The court's going to take this case on when there's a circuit split," Newby said.
Continuing prediction market legal battles
The panel also underscored the unusually broad coalition state attorneys general have assembled against prediction markets.
Brian Kane, executive director of the National Association of Attorneys General, said more than 40 attorneys general signed a comment letter submitted to the CFTC, while dozens of states have joined amicus briefs supporting litigation challenging prediction markets. Kane said the cooperation is driven not by opposition to innovation or gambling itself but by a shared interest in preserving state authority.
"They're coming together to defend their state laws and those regulatory systems that have carefully been put in place by legislators," Kane said. "It's one of those areas where you've got a lot of bipartisan cooperation across the board."
That states' rights argument was the central theme of regulators' opposition to prediction markets throughout the conference.
Nevada Gaming Control Board Chairman Mike Dreitzer told attendees earlier in the meeting that Nevada is not opposed to innovation but believes any prediction-style wagering product should operate inside existing state gaming frameworks with licensing requirements, responsible gambling safeguards and consumer protections. He also warned that sports event contracts could eventually expand beyond sports into nationwide online casino-style products if left unchecked.
McCuskey echoed those concerns, arguing prediction market operators compete against sportsbooks without undergoing the extensive licensing, taxation, and regulatory oversight required of traditional gaming operators.
"There is this inherent unfairness," McCuskey said during last week's meeting of state lawmakers and gaming industry executives. "The people who are sitting in this room went through an astronomical regulatory process in order to be able to offer the product that is being offered by somebody that didn't have to do any of it."
He added that consumers often struggle to distinguish between regulated sportsbooks and prediction market platforms because the products appear similar despite operating under different legal frameworks.
While Congress could theoretically settle the dispute legislatively, speakers largely dismissed that possibility. Kane described congressional action as a "wild card," prompting laughter from the panel and attendees before McCuskey joked he had a better chance of winning the lottery.
Instead, with Supreme Court action on prediction markets likely at least a year away, officials said state attorneys general have increasingly become the primary leaders on the latest major national legal dispute, citing previous multi-state efforts involving tobacco, opioids, and social media companies.
"The real work on all of these things happens in AGs' offices," McCuskey said. "Big issues that matter are being changed and fixed by AGs, not Congress."
