Ohio Attorney General (AG) Dave Yost revealed he's leading a coalition of 36 AGs in the battle against Kalshi, a prediction market site already facing multiple lawsuits with several U.S. states.
The suit, pending in the U.S. Court of Appeals for the Third Circuit, overshadowed the larger scandal surrounding the future of sports betting regulation in the U.S.
Key takeaways
- Ohio AG Dave Yost is leading a 36-state coalition that filed an amicus brief opposing Kalshi’s event-based betting market classification in a New Jersey lawsuit.
- The coalition argues Kalshi's contracts are disguised sports bets, violating state-level gambling regulations.
- Critics warn Kalshi’s model threatens state sovereignty, tribal compacts, and undermines federal gambling oversight.
Kalshi argues its event-based contracts fall under federal commodities law and therefore must be regulated by the CFTC. However, the coalition of attorneys general argues Kalshi's contracts are sports bets disguised as commodity transactions and hence must continue to be regulated as gambling at the state level.
The AG coalition comprises states with varied gambling laws.
“States rightfully have the ability to protect their citizens from the negative consequences of online gambling, no matter how it's packaged. We're protecting the unprotected,” Yost said of the action.
The case resulted from Kalshi's attempt to pre-empt enforcement action by New Jersey, which issued a cease-and-desist letter directed to the company's contracts. Though Kalshi brought many suits, this is the first one to reach an appellate court, bringing a flurry of amicus briefs that review the case's broader regulatory implications.
Together, the American Gaming Association (AGA), the AG coalition, the District of Columbia, the Northern Mariana Islands, tribal gaming organizations, and advocacy groups, including the New Finance Institute and Stop Predatory Gambling, submitted amicus briefs opposing Kalshi.
The AGs emphasized in the brief that erasing “the states' ability to regulate online sports betting would pose severe risks to the states' citizens.”
Criticism against Kalshi rising
Like the states, the AGA has been sharply critical of Kalshi's approach, arguing the CFTC lacks the appropriate expertise, infrastructure, and enforcement tools to oversee sports betting markets.
Tribal communities also registered their opposition to it, saying Kalshi's business model threatened tribal gaming's economic and regulatory underpinnings. They argue Kalshi's contracts violate the Indian Gaming Regulatory Act and contradict current tribal-state compacts.
They also contend the contracts are either outside the ambit of the Commodity Exchange Act or that its language specifically prohibits them.
The opposition fears a federal court ruling in Kalshi's favor would erode state sovereignty, destabilize tribal gaming compacts, and create an unregulated federal loophole in the sports betting market.
They contend Congress hasn't delegated power to the CFTC to regulate event-based betting as Kalshi suggests.
Kalshi CEO Tarek Mansour described opposition as an attempt to suppress prediction markets. In a social media message in March, he accused regulators of trying to censor a legitimate form of speculative trading.
Kalshi is preparing its official response to the court, due July 24, following an extension the judge granted on June 16.
News: 3rd Circuit grants Kalshi a 14-day extension until July 24, 2025 to file its brief in response to New Jersey's opening brief; Kalshi had sought a 22-day extension due to "several other litigation deadlines," but with an expedited appeal, the CA3 shortened it to 14 days. pic.twitter.com/1jmhnY5G8c
— Daniel Wallach (@WALLACHLEGAL) June 16, 2025
