States Push to Keep Sports Betting Under Control Amid Prediction Market Expansion

Nevada Attorney General Aaron D. Ford announced that he helped lead a coalition of 37 states and the District of Columbia in submitting an amicus brief to the United States Court of Appeals for the Fourth Circuit, supporting states’ long-established power to regulate sports betting within their borders.

Dozens of States Submit a Brief in Support of Internal Sports Betting Regulation

The core issue in the appeal is whether a federally regulated event-contracts platform can offer “sports event contracts” (essentially yes/no outcome contracts) that effectively function like sports betting, while avoiding state licensing, taxes, and responsible-gambling rules. This directly challenges prediction markets such as Kalshi, which assert they can operate nationwide because they are officially registered in the US as a Designated Contract Market (DCM) under the Commodity Futures Trading Commission (CFTC).

It’s interesting to note that the Trump family has ties to the two largest prediction market platforms, Kalshi and Polymarket. The latter, in particular, is planning a return to the United States after the company recently received a go-ahead from the CFTC.

Kalshi, Polymarket, and other prediction markets assert that their platforms are financial trading, not gambling. They argue that prediction markets function like a derivatives exchange where users trade contracts that pay out based on event outcomes. The company has been doubling down on its mission, as recently, Kalshi set up a research team that aims to give a better understanding of forecasting through market data.

However, states maintain that the federal framework governing derivatives markets was never intended to bypass state gambling laws. Allowing it to do so would create a regulatory loophole, potentially letting sports betting products expand without the licensing and consumer-protection safeguards that states have established through years of regulated wagering, the states argue.

Nevada Attorney General Doesn’t Budge

In a press release, Nevada Attorney General Ford said that the state is widely recognized as the foundational home of sports wagering. States, not federal financial regulators, have decades of experience safeguarding consumers, maintaining the integrity of sporting events, and addressing issues like underage gambling, he explained.

Ford added that he is proud to lead this effort alongside a bipartisan coalition of states to emphasize that Congress did not quietly strip states of their authority to regulate sports betting. He further explained that permitting unregulated betting nationwide would disrupt that balance without explicit authorization.

For the time being, the coalition is urging the Fourth Circuit to maintain the current framework. This means that states should continue to license and regulate sports betting, while federal oversight remains focused on its original role of supervising derivatives markets rather than supplanting state gaming authority.