The International Association of Gaming Regulators (IAGR) and the North American Gaming Regulators Association (NAGRA) have filed a joint amicus brief with the U.S. Supreme Court requesting review of Flaherty v. KalshiEX, LLC. The question is whether the federal Commodity Exchange Act preempts state sports betting laws when wagers are structured as event contracts on exchanges registered with the Commodity Futures Trading Commission (CFTC).
Appellate courts have reached opposite conclusions. The Third Circuit held that federal law likely preempts New Jersey sports betting statutes as applied to such contracts. The Ninth Circuit ruled the other way in a similar case involving Nevada law. After Murphy v. NCAA in 2018, states gained the authority to permit or prohibit sports betting when the old PASPA ban was struck down.
'IAGR is concerned that sports betting through prediction markets leaves consumers without the protection of gaming regulators,' said IAGR President Ben Haden. Regulators point to risks: minors gain access to betting without restrictions, problem gamblers are left without safeguards, sports integrity is threatened. Regulators typically enforce age requirements, maintain self-exclusion lists, monitor suspicious betting activity and vet operators. If event contracts fall outside their jurisdiction, those mechanisms do not apply.
Marc Dunbar, president of the International Masters of Gaming Law and counsel to the associations, said the conflicting court decisions 'destroy more than a century of state-based gambling regulation'. Regulators need clarity as they make supervisory and enforcement decisions under legal uncertainty.
