G2E panel finds prediction markets facing 38 losses in 43 state rulings

Daniel Wallach did not open with a metaphor. He opened with a number: 38 wins for the states out of 43 judicial proceedings. Standing in a conference room at The Venetian Expo in Las Vegas, at a panel nominally about compliance frameworks, he called it a tidal wave. The number is the argument.

The Global Gaming Expo panel last week assembled three voices who disagreed on almost everything except the conclusion. Mike Dreitzer, chairman of the Nevada Gaming Control Board, framed state enforcement as obligation rather than competition — his position was that operators who ignore Nevada licensing law have made a legal choice, not a business one, and the board's response follows accordingly. Stephen Martino of MGM Resorts sat beside him representing the licensed industry's concern, which is less about ideology than about capital: MGM and its peers have spent decades and hundreds of millions of dollars building compliance infrastructure that prediction markets have not matched and do not appear to want to.

Wallach's contribution was the procedural read, and it is worth taking seriously. The Third Circuit cert petition came from New Jersey. The Ninth Circuit petitions from Robinhood and Crypto.com followed weeks later. Kalshi, facing the Third Circuit petition, has asked the Supreme Court for a 30-day extension on its response. Wallach's interpretation: Kalshi does not want the Third Circuit case going to SCOTUS alone. His reasoning draws on a 20-year reversal rate that he placed at 70% for cases the Supreme Court accepts. If the Third Circuit case travels to Washington without the Ninth Circuit alongside it, Kalshi is presenting the Court with one data point instead of a circuit split — and a reversal court with one data point and a 38-of-43 record in state courts below is not an easy room.

I have watched this procedural game before in a different context — a party facing adverse circuit precedent who works to delay consolidation long enough to generate a competing circuit outcome. The move is defensible. Whether it succeeds depends on whether the Court sees the delay as legitimate case management or as a strategy to run out the clock on state enforcement actions that are already producing injunctions.

The 38-of-43 figure is the number that matters more than any single ruling. Wallach is correct that a pattern at that scale is not statistical noise. What the pattern does not tell you is whether those 43 proceedings reflect identical legal questions or a mix of state theories, some of which may be weaker than others. The Illinois federal court ruling — which found sports event contracts are likely swaps and therefore fall under CFTC jurisdiction — sits outside that count, and it cuts the other direction. One federal district court opinion does not reverse a trend, but it creates the circuit split logic that makes Supreme Court review more plausible.

The legal standard the Court would apply if it grants cert is not whether prediction markets are socially beneficial or competitively fair to casinos. It is whether the Commodity Exchange Act preempts state gaming law as applied to CFTC-designated contract markets offering event contracts. That is a statutory preemption question under the Supremacy Clause, and it is one on which the lower courts have not yet spoken with one voice. Dreitzer's position — that Nevada's law applies regardless of federal designation — is a serious argument, but it is also the argument that requires the Supreme Court to read the CEA as silent on preemption where the text may not be.