The International Association of Gaming Regulators (IAGR) and the North American Gaming Regulators Association (NAGRA) have filed a joint amicus brief urging the U.S. Supreme Court to take up Flaherty v. KalshiEX, LLC. The case asks whether the Commodity Exchange Act preempts state gambling laws when sports wagers are offered as event contracts on CFTC-registered exchanges.
The two associations filed their joint amicus brief with counsel from the International Masters of Gaming Law (IMGL), according to Indian Gaming.
The brief centers on a single legal question: whether the Commodity Exchange Act preempts state gambling laws when sports wagers are offered as event contracts on exchanges registered with the Commodity Futures Trading Commission (CFTC).
Conflicting Circuit Court Rulings Created the Dispute
The associations are asking the Supreme Court to resolve conflicting appellate interpretations. In preliminary-injunction proceedings, the Third Circuit concluded that federal law likely preempts application of New Jersey’s sports-wagering laws to the challenged contracts, Indian Gaming reported. The Ninth Circuit reached a contrary conclusion concerning Nevada’s laws.
The legal backdrop traces to the Supreme Court’s 2018 decision in Murphy v. NCAA. Before that ruling, the Professional and Amateur Sports Protection Act (PASPA) barred states from authorizing sports wagering, subject to limited exceptions. Murphy invalidated PASPA, allowing states to choose whether to authorize and regulate sports wagering or retain their existing prohibitions.
IAGR President Raises Consumer Protection Concerns
Ben Haden, president of IAGR, outlined the association’s position in a statement reported by Indian Gaming.
“IAGR is concerned that sports wagering offered through prediction markets leaves consumers without the protection gaming regulators provide pursuant to public policy established in their jurisdiction,” Haden said. “Our brief challenges the claim that offering a sports wager as an event contract exempts it from state gambling laws.”
Haden pointed to specific risks: “Without the protection and oversight provided by gaming regulators, we are highlighting the risks of underage players being able to access gambling freely, problem gamblers being left without proven harm-prevention tools — or worse, being targeted by operators — and the integrity of sport being put at risk.”
He added: “Regulators need clarity about their authority to enforce proven safeguards and the limits their jurisdictions have placed on gambling. That is why IAGR is supporting this request for Supreme Court review.”
Amicus Brief Details the Regulatory Framework at Stake
The amicus brief explains that legislatures establish the boundaries of lawful gambling, including outright prohibition, according to Indian Gaming. Regulators implement those legislative choices by approving specific events and wager types, restricting activities that pose unacceptable risks, supervising licensed operators and taking enforcement action against unauthorized operators.
The brief highlights minimum-age requirements, self-exclusion programs, prohibited-participant rules, access to records and monitoring for suspicious betting. It also identifies consequences for tribal gaming regulation and enforcement.
IMGL counsel for the associations argue that regulators must continue making supervisory and enforcement decisions while the courts disagree. That gives the request for review immediate practical importance. The brief seeks clarity about the federal boundary while recognizing that different jurisdictions have made different policy choices about gambling.
IMGL President Cites a Century of Regulatory Authority
Marc Dunbar, president of the International Masters of Gaming Law and counsel of record for the associations, framed the stakes of the case.
“Our members are honored to be representing NAGRA and IAGR in this matter in the hopes of clearing up the significant uncertainty created by the conflicting federal court decisions, which is upending more than a century of established state regulatory authority over gambling within state and tribal borders,” Dunbar said, as reported by Indian Gaming.
No timeline has been indicated for the Supreme Court to decide whether to grant review.
