Harkening back to gambling on the ships that brought British settlers to the U.S. and gambling bans in the colonies, a group of 39 U.S. attorneys general on Dec. 22 filed an amicus brief in support of the state of Maryland — one of the original colonies — in a case against Kalshi.
Writing that during the up to 10-week long trip between Britain and America, sailors gambled to pass the time, the attorneys general trace the history of state-regulated gambling, including Puritans and Quakers banning it in Massachusetts and Pennsylvania in the 1600s, and lawmakers in New Hampshire, New Jersey, and the Northwest Territories prohibiting it in the 1700s. Prohibitions spread through the 1800s, before Nevada pushed against the tide, legalizing “wide-open” gambling in 1931.
Nearly 100 years later, a fight over gambling is galvanizing traditional sports betting operators and bringing together stakeholders who previously weren’t always on the same page. Within 24 hours, the group of attorneys general, the Tribal Amici, and the American Gaming Association (AGA) filed friend-of-the-court briefs in support of the state of Maryland in the case against Kalshi.
Kalshi in April sued the state after it sent a cease-and-desist letter that would have kept Kalshi from offering sports event contracts within the state. A district court judge in August denied an injunction request that would have allowed Kalshi to continue operating, but the company appealed to the Fourth Circuit, and all parties agreed that Kalshi could continue to operate until the case is resolved.
Texas absent, again
The first entry on the Fourth Circuit docket was filed Dec. 22, and almost immediately followed by the flurry of amicus briefs. The Tribal Amici, a coalition of more than 25 tribes and tribal organizations across the U.S., filed similar briefs at the district court level.
Attorneys general from the biggest state in the U.S. and the five biggest gaming states were among those who signed on to the amicus brief. It is the first time that a group of AGs have gotten together to make a statement in a court case. In August, a group of 50 attorneys general wrote to the Department of Justice demanding a clamp-down on offshore betting. Texas Attorney General Ken Paxton did not sign the letter or the amicus brief.
Led by Nevada Attorney General Aaron Ford and Ohio Attorney General Dave Yost, the brief was also signed by California Attorney General Rob Bonta, New York’s Letitia James, Pennsylvania’s Dave Sunday, Illinois’ Kwame Raoul, and Michigan’s Dana Nessel. California doesn’t have legal sports betting, but the state in 2025 made multiple moves to protect gambling in the state — the state legislature passed a law to ban sweepstakes platforms beginning Jan. 1, 2026, and Bonta’s office offered an opinion that daily fantasy sports are illegal. New York, Pennsylvania, Illinois, Ohio, and Michigan represent the five biggest legal online sports betting markets in the U.S.
Regulators and politicians in Nevada and Ohio have been vocal about the future of prediction markets in their states. Nevada regulators have taken a hard line against prediction markets, telling gambling licensees that working with or offering prediction markets will result in penalties, up to license revocation. In November, FanDuel vacated its license in Nevada and DraftKings withdrew its application under pressure from state regulators. In addition, a federal court has ruled that Crypto.com could not offer sports event contracts in the state, and reversed an initial ruling that would have allowed Kalshi to operate.
In Ohio, the regulator was among the first wave to tell its licensees that involvement with prediction markets could cost them their licenses. And the state is in court with Kalshi, which sued after the letter, saying that threatening the licenses of vendors doing business with Kalshi could ultimately harm Kalshi.
AGs: Congress wasn’t clear
In the brief, the attorneys general argue that the “courts expect Congress to speak clearly when it intends to shift this country’s traditional balance of power,” and the “courts expect Congress to speak clearly if it intends to give a federal agency unprecedented authority over significant topics.” The AGs say that Congress did neither of those things, making Kalshi’s arguments moot.
The AGs go on to follow the loosening of gambling laws and regulations throughout the U.S., ending with the 2018 Supreme Court decision to overturn the Professional and Amateur Sports Protection Act, making sports betting a states’ rights issue, and the wave of legalization between 2018-25.
The AGs also trace the history of derivatives trading, dating to a 1921 congressional decision to allow certain types of derivatives and commodities trading, including the 1936 creation of the Commodities Exchange Act (CEA) and the 1975 creation of the Commodity Futures Trading Commission (CFTC), which oversees prediction markets. The CFTC until 2010 did not regulate swaps.
Kalshi argues that sports event contracts are swaps — which the Dodd-Frank Wall Street Consumer Protection Act created in 2010 defines as “to include any agreement, contract, or transaction … that provides for any purchase, sale, payment, or delivery … that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.” The act was crafted in response to the 2008 financial crisis.
But the AGs say Kalshi’s sports event contracts are “indistinguishable from sports betting,” that the CEA does not preempt states’ rights in this case, and that Kalshi’s “position violates the federalism canon.”
Ultimately, the attorneys general circle back to the days of Columbus and colonies, pointing to the long-standing state regulation of gambling. They also argue that Congress never overtly intended to legalize sports betting via the Dodd-Frank Act, and, in fact, would have been required to clearly state that intent.
Federal framework would upend states
Among their other arguments, the AGs wrote:
- States have long experience regulating gambling while the federal government does not.
- The Dodd-Frank Act “signals … a lack of any intent to preempt sports-betting regulations.”
- Because states are not of “one mind” about sports betting — 39 states plus the District of Columbia and Puerto Rico have legalized, but 11 states have not — the CFTC would have “an incredible and unexpected amount of power” if it is allowed to regulate the same product across all U.S. jurisdictions.
- Taking Kalshi’s argument a step further, the company appears to be arguing that sports betting must occur on designated contract markets like Kalshi, and nowhere else, meaning that state-regulated sports betting would be illegal.
- Because it is legal to buy an event contract at age 18, allowing Kalshi to continue to operate effectively lowers the legal gambling age.
The AGs wrote that Congress did not “sneak” sports betting into the Dodd-Frank Act, nor does the CFTC have the infrastructure to regulate it or put guardrails around it. The lack of responsible gaming framework, would, wrote the attorneys general, “create a sizable hole in the States’ ability to protect their citizens from predatory practices and other problematic behavior.”
