Casino Association of New Jersey Joins Fight Against Kalshi

• Trade group representing New Jersey casinos files amicus brief in support of state’s appeal of Kalshi injunction
• Joins increasing list of groups filing amicus briefs against prediction markets giant
• Similar move occurred in Nevada earlier this month

The Casino Association of New Jersey (CANJ) today filed an amicus brief in support of the state’s appeal of a preliminary injunction recently granted to Kalshi that allows the prediction markets firm to continue operating there.

CANJ, which represents the nine Atlantic City casinos, filed the brief in the US Court of Appeals for the Third Circuit, joining an increasing list of groups coming out against prediction market operators that now includes the American Gaming Association (AGA), anti-predatory gaming entities, states and tribal casino operators.

After the New Jersey Division of Gaming Enforcement in March sent Kalshi a cease-and-desist order, the operator of a platform on which yes/no derivatives contracts are traded won a preliminary injunction against the regulator the following month. At issue is Kalshi and competitors offering sports derivatives contracts, including in states where sports wagering isn’t legal, without holding state gaming licenses.

Stripping away the semantics, this case most directly concerns gambling on sports,” according to the CANJ brief. “In these States—and even in other States that have not legalized sports betting, like California and Texas—companies such as Kalshi now offer online sports betting through events contracts on the futures marketplace.  Kalshi itself has called what it does ‘sports betting.”

Several states, including New Jersey, with large land-based casino and thriving sports wagering segments, have filed cease-and-desist letters against Kalshi, arguing the company is flouting state gaming laws because it doesn’t hold relevant licenses in those jurisdictions.

Precedent for Casino Association of New Jersey Action

The CANJ isn’t the first casino trade group to enter the fray against Kalshi. Earlier this month, Nevada District Court Judge Andrew Gordon allowed the Nevada Resort Association (NRA) to enter that state’s case against the futures market operator.

“If Kalshi prevails in this case, the NRA members likely would be placed at a considerable competitive disadvantage because Kalshi and others like it would not have to comply with Nevada’s comprehensive gaming laws, including prohibitions on bettors under 21 and types of bets allowed,” said Gordon in his ruling.

Nevada and New Jersey, the two largest casino markets in the US and homes to two of the biggest sports wagering markets, were among the first states were among the first to enter the fight against Kalshi — moves largely prompted by that company’s foray into sports even contracts.

Kalshi Argument Rests Largely with Federalism

In its various state-level legal spats, Kalshi is leaning into the fact that it’s regulated at the federal level by the Commodities Futures Exchange Commission (CFTC) and that Commodities Exchange Act (CEA) provides precedent for it offering derivatives that are banned in some states.

At an April conference, co-founder and CEO Tarek Mansour pointed out that Kansas doesn’t allow grain futures trading, but because that activity is regulated federally, the state cannot stop it from occurring there. Kalshi believes it meets the standards for futures contracts set forth in the CEA and while that may be true, the CANJ says that doesn’t mean states’ regulatory rights are diluted.

“Nothing in the Commodity Exchange Act’s language clearly signals that Congress was trying to strip the States of their traditional power to regulate sports gambling,” noted the trade association in its amicus brief. “Indeed, several parts of the statutory scheme overtly recognize the continued application of state law.”

Citing US code, the New Jersey association says the CEA does not provide for the “broad preemptive coup Kalshi envisions.” It adds that weakening states’ ability to regulate sports betting could pose risks to vulnerable bettors.