NCLGS amicus brief backs New Jersey bid for Supreme Court review

New Jersey Attorney General Jennifer Davenport filed a petition for a writ of certiorari, asking the Supreme Court to take up the Kalshi preemption dispute. The National Council of Legislators from Gaming States has now filed an amicus brief behind that petition, and the argument they are making is not the one most people in this industry expect.

The NCLGS brief does not directly contest whether the CFTC has jurisdiction over federally regulated exchanges. That concession matters. By leaving the jurisdictional question open at its edges, the brief narrows its ask to something more durable: the Court should not issue a ruling that categorically prevents states from touching sports event contracts. The authors are not asking SCOTUS to hand states a win. They are asking it not to hand Kalshi a permanent shield.

The downstream concern they raise is the one worth pricing carefully. If the Court rules that CFTC-regulated event contracts are immune from state gaming law, the brief warns that casinos and pari-mutuel operators would have an incentive to restructure through similar federal frameworks. The tax revenue argument follows from that: state gaming taxes, which fund everything from addiction programs to general budgets, would face structural erosion at the precise moment prediction market volume is compounding fastest. I would note that this is not a speculative concern dressed up as legal theory. I have watched enough regulatory arbitrage cycles to know that when a structural tax advantage opens, the industry finds it within eighteen months.

The reporting does not tell me whether SCOTUS has agreed to hear the case. The certiorari petition is before the Court; the amicus brief supports that petition. Acceptance is not guaranteed, and the Court's docket gives no timetable I can report. What I can say is that the Third Circuit decision the brief is appealing represents the most significant federal appellate ruling on state preemption in this space so far, and that SCOTUS declining to hear it would itself be a signal — one that leaves the Third Circuit precedent standing while other circuits may diverge.

My read differs from the consensus on one point. Most analysis in this space treats the CFTC preemption argument as Kalshi's strong hand. I think the brief's framing exposes a structural vulnerability in that argument: if the NCLGS can get the Court to treat the restructuring-incentive problem as a live harm rather than a speculative one, the preemption shield weakens considerably. Federal preemption doctrines have bent before when courts found that they created regulatory arbitrage at scale. The NCLGS is making exactly that argument, and they have made it in the least inflammatory way possible — by conceding jurisdiction where jurisdiction is clearly federal and contesting only the absolute version of the preemption claim.

Prediction markets exist on Kalshi and elsewhere for whether SCOTUS grants certiorari in cases of this type. A grant here would force a definitional ruling the industry has spent three years avoiding.