While several district courts are tackling the actual lawsuits between event contract provider Kalshi and state gaming regulators, it is the appeal of the New Jersey District Court’s decision in the Third Circuit Court that is where the industry is focused.
New Jersey Attorney General Matthew Platkin and Division of Gaming Enforcement (DGE) Director Mary Jo Flaherty appealed the lower court’s decision to grant a temporary injunction that is keeping Kalshi online in the Garden State.
New Jersey is one of three states where state regulators have been sued by Kalshi after they sent the company cease-and-desist letters regarding its growing catalog of sports contracts. The heart of the suit is whether or not these kinds of contracts are covered by the Commodity Exchange Act (CEA) and the regulatory body it created, the Commodity Futures Trading Commission (CFTC).
The suit is still moving forward in the lower court, but how the Third Circuit Court acts could have a huge impact on every suit.
You may be wondering: Why?
Let us explain.
Why are other parties involved in this decision appeal vs the suits themselves?
Generally, district courts do not allow amicus brief submissions from third parties. With New Jersey appealing to the Third Circuit, this is the first opportunity for parties to file an amicus brief voicing their reason why the court should act a certain way.
One group that is involved at the district court level is the Nevada Resort Association (NRA), which is now a party in the court case in that state. However, in order to do so, they had to be added as a relevant party in the case.
What is the purpose of these amicus briefs?
If you aren’t a lawyer, the concept of an amicus brief may be fuzzy to you.
Essentially, it is an opportunity for interested parties in the case to offer legal arguments, takes, opinions and evidence that might not be mentioned by the plaintiff or defendant. Judges will read and take these briefs into consideration before making a decision.
Who filed amicus briefs in the Kalshi NJ injunction appeal?
Glad you asked.
There were five different officially filed briefs, but a sixth, which was submitted minutes after the deadline, is pushing for inclusion. This deadline is only for those who are filing an argument to reverse the district court’s decision. The briefs supporting the injunction, effectively Kalshi’s allies, will come at a later date.
The groups who filed briefs are:
- 34 different attorneys general from various states and U.S. territories
- A group of tribal organizations, including 60 tribes and the Indian Gaming Association
- The American Gaming Association
- The Casino Association of New Jersey
- Stop Predatory Gambling, Association of American Physicians and Surgeons, Texans Against Gambling
- The New Finance Institute
Now, to tell you about each of them and what they had to say.
Attorneys General from across the political spectrum
In 2025, it is tough to find an issue that can unite both parties in the U.S., but the collection of lawyers representing the majority of states ranging from Utah to New York seems to have done just that.
The majority of states are included here, but two notable exceptions are Georgia and Texas, which both have little gambling besides the lottery. Another is California, which never has any sort of consensus about anything related to gambling.
The heart of the argument:
Unlike the casino groups, this amicus brief focused on the issue of federalism. These AGs are concerned that letting the CFTC supersede state gambling regulators is a big step to take with huge ramifications for the country beyond just gambling.
The brief noted that, historically, Congress is very clear when it intends to make a major preemptive change. Adding that there are “no elephants in mouse holes,” the brief suggests that upending who has control over what it claims is very obviously wagering on sports via event contracts is not something to do based on imprecise language of a relatively obscure regulatory rule.
The brief also addressed the idea that Kalshi is merely a forum for trading and not “the house” by pointing out that it is essentially the same as a casino offering poker, which is legally defined as gambling, where the casino or website hosts people playing the game against one another.
Choice quote:
“When Congress removes the States’ historic police powers, it does not whisper in the dark of night. Rather, courts expect Congress to speak clear as day when it intends a dramatic shift in our country’s traditional balance of power.”
Tribal groups
Unsurprisingly, this brief led with the Indian Gaming Regulatory Act (IGRA) and argued what Kalshi is offering is essentially Class III gaming and, in turn, an IGRA violation. The brief drew particular attention to the fact that Kalshi does not geofence users, so these contracts are taking place not just across the U.S. but on tribal land.
The heart of the argument:
The brief brought more to the table, though, such as the argument that the special rule at the heart of this case is structured in a two-prong format, meaning if something is disqualified in the first half of the rule, the back half doesn’t even come into play (more on that whole two-pronged thing here).
Finally, it argued that the CFTC was not really holding up its end of the bargain as a regulatory agency and, thus, the CEA was invalid. Citing a prior Fifth Circuit case, the brief noted that the court established a three-part test to determine the constitutionality of the privileges conferred by lawmakers to a regulatory body:
- That government office needs to have final say
- That he agency does need to actually act as a regulator and do stuff
- That the private parties impacted by that agency need to be beholden to it
Since event contracts are self-certified and don’t need CFTC approval to go live, the tribes argued that point one is not met. As for point two, well, the CFTC has notably not taken any action, so there goes that one. Finally, the tribes argued that if nothing is going to stop Kalshi and others, the agency is ineffective and fails all three.
Choice quote:
“Nothing in any of this language preempts, amends, diminishes, or even conflicts with IGRA. If anything, the statutory and regulatory language above reinforces the longstanding view that IGRA’s comprehensive structure dominates the regulation of gaming on Indian lands.”
American Gaming Association
The AGA is the largest casino trade group in the land, so it certainly felt a need to chime in with a brief given this could have ramifications far beyond sports betting.
The heart of the argument:
Like the attorney generals’ brief, AGA argued that this fundamental reimagining of who oversees gaming has not been overtly stated by Congress, so it is a bit hasty to read the language of the special rule as binding.
The brief also highlighted the economic impact this would have on states, as they rely heavily on regulated gaming for both tax income and economic prosperity. Reiterating that gambling has historically been considered a right of the states to determine, it points out that there is a reason different states opt for different gambling frameworks, as it is not something where one size fits all.
Choice quote:
“At bottom, Kalshi’s model is a too-clever-by-half attempt to evade the rules. Congress never intended to allow such evasion.”
Casino Association of New Jersey
Since the case is based in New Jersey, much like the NRA involved itself in Nevada, the state casino trade group showed up here.
The heart of the argument:
Of all the briefs, this is the one that is most hostile towards Kalshi. It also very much questions the ethics and propriety of current Kalshi board member and former CFTC commissioner, Brian Quintenz, taking the helm of the organization if President Donald Trump’s nomination goes through.
“Kalshi is an online casino with a guerrilla marketing strategy, not the next Chicago Mercantile Exchange (CME) competitor,” the brief noted before rolling out a host of examples of Kalshi marketing in which it either directly or indirectly presents its product as gambling. This is an argument several other briefs made as well, with at least one Drake meme cameo among a range of social media posts.
Finally, the state pointed out that if the court rules in Kalshi’s favor, it would be invalidating another important case the state was involved in, Murphy vs. NCAA et al, the case that repealed the Professional and Amateur Sports Protection Act (PASPA).
Choice quote:
“If Kalshi wins this appeal, it is positioned to leverage its considerable influence to sic the federal government on casinos that comply with state law. This is no idle speculation: Mr. Quintenz—again, a Kalshi board member—has been nominated as CFTC Chair, and during his nomination hearing, he reaffirmed that trading event contracts (including sports event contracts) is illegal outside a CFTC-designated contract market. Kalshi’s suit is thus not just an effort to circumvent New Jersey law. It is a stalking horse for Kalshi to displace state regulators while crushing competitors.”
Stop Predatory Gambling et al
Those in the gaming industry are generally familiar with Stop Predatory Gambling, an advocacy group based in Massachusetts that regularly supports and files lawsuits in an attempt to clamp down on what the organization believes are inducements and offers designed to addict players.
The Texas group is a similar organization at the state level, while the doctors’ organization is a traditionally conservative trade group in the medical world.
The heart of the argument:
Despite holding a different end goal than the other parties, this brief actually reiterated many of the arguments put forth elsewhere.
It also spent considerable time focused on the public harm this decision could potentially have. As other briefs noted, Kalshi’s event contracts do not come with the same protections that are imposed upon regulated forms of gambling. With essentially no government oversight, no responsible gaming protections, an 18+ age limit and an unfettered ability to market however event contract firms see fit, the brief argues the already troubling issue of problem gambling would be exacerbated.
Choice quote:
“The public interest is strongly against the preliminary injunction issued below. The district court devoted merely one cursory sentence to this factor, without considering the immense public harm to be inflicted by unregulated commercialized gambling.”
New Finance Institute
One of these things is not like the other, right? This group technically did not file in time, nor did they file in support of one party or another. Rather, they hope to file a brief that supports overturning the injunction but remain neutral.
We’ll let NFI tell you what it is that they do:
“NFI is a public benefit corporation with a mission dedicated to advancing financial literacy and improving legal outcomes through definitional clarity. NFI’s work centers on the premise that prosperity and informed decision-making begin with a shared understanding of foundational financial terms.”
Heart of the argument:
Rather than talk about preemption and federal vs. state oversight, the NFI took a similar tact as the tribes did, suggesting that the CFTC’s inactivity on this issue is a problem. Its rationale is very different though.
The NFI argues that the CFTC should have formally adopted a stance on event contracts related to sports years ago and that their inactivity led to Murphy vs. NCAA, the repeal of PASPA and what they argue is the illegal adoption of sports betting by the majority of states, as the rgroup believes the CFTC has total control overseeing sports betting.
The argument also said that the lack of response from the CFTC on these contentious self-certified contracts was a violation of the Administrative Procedure Act (APA).
“The CFTC’s inaction is too consequential to be justified by competing priorities or resource constraints–it creates a regulatory vacuum that reshapes the legal landscape entirely,” the group put forth. Calling the CFTC’s behavior “regulatory improvisation”, what the NFI wants is the injunction reversed, Kalshi taken offline and for priority to be placed on the court seeing this through to a conclusion since this uncertainty is not tenable.
Choice quote:
“It was the CFTC’s non-enforcement following the Supreme Court’s repeal of the Professional and Amateur Sports Protection Act…in 2018 that enabled sports gambling under the incorrect premise that states have the right to regulate sports gambling. In reality, the states never had that authority.”
What’s next?
Next up in the appellate process is for Kalshi to file its opposition to New Jersey’s appeal. Once it does that, those wishing to file amicus briefs on its side of the argument will have seven days to do so.
In the meantime, the lawsuits in Nevada, New Jersey and Maryland are moving forward. Nevada, like New Jersey, granted an injunction to keep Kalshi online as proceedings move forward. The court has also denied the state’s motion for dismissal, a victory Kalshi publicly celebrated. Maryland, where the most recent case was filed, is still determining whether or not to grant a temporary injunction.
