The Current: EVERYONE Joins The Case Against Kalshi In Federal Court
OK, maybe not everyone, but hundreds of tribes, 34 states, the American Gaming Association, and others file amicus briefs. Gambling news roundup: Bad news for sweeps in LA, NY, MS.
The Current is a weekly report on developments in the gambling industry from The Closing Line.
The battle lines in the fight for the future of US sports betting are being drawn in the federal court case between Kalshi and New Jersey state officials.
Several high-profile groups have filed amicus briefs in support of New Jersey today (and yesterday) in the case in the US Court of Appeals for the Third Circuit, including:
The American Gaming Association
34 states plus the District of Columbia and the Northern Mariana Islands
A group representing hundreds of tribes:
The Indian Gaming Association
National Congress of American Indians
California Nations Indian Gaming Association
Arizona Indian Gaming Association
Washington Indian Gaming Association
Oklahoma Indian Gaming Association
The Native American Finance Officers Association
United South and Eastern Tribes Sovereignty Protection Fund
Tribal Alliance of Sovereign Indian Nations
60 federally recognized Indian Tribes
The Casino Association of New Jersey
Stop Predatory Gambling et al
The case started in district court with Kalshi filing a lawsuit to stop New Jersey from enforcing a cease-and-desist letter against Kalshi for offering illegal sports betting. Kalshi has filed three lawsuits, but this is the first one to reach an appeals court.
That’s why this particular case has drawn so many amicus briefs — the stakes are high. An appeals court ruling will carry more weight than a lower court ruling.
“The amici are doing exactly what they're supposed to: explaining the importance of this case,” said Andrew Kim, an attorney with Goodwin Law who has been following prediction markets litigation. “Unlike judges in the district courts, the Third Circuit has a more complete picture of the seismic regulatory upheaval Kalshi's legal position would unleash.
“Sometimes, the number and identities of the signatories alone convey that message — like a rare, bipartisan coalition of attorneys general, basically all of sports-betting America.”
In March, Kalshi CEO Tarek Mansour tweeted that “authorities are still trying to censor” prediction markets. Whether this is viewed as censorship or legitimate state-level enforcement is in the eye of the beholder, I suppose.
States line up against Kalshi
A total of 34 state attorneys general (or similar) came out against Kalshi offering sports event contracts in their jurisdictions. The spectrum runs from blue states with sports betting (like New York) to red states with no gambling (like Utah).
Here’s the full list of states (and others) that joined this amicus:
Alabama
Arizona
Arkansas
Colorado
Connecticut
Delaware
Hawaii
Idaho
Illinois
Indiana
Iowa
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Montana
Nevada
New York
North Carolina
North Dakota
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Utah
Vermont
Washington
Wisconsin
District of Columbia
Northern Mariana Islands
From the brief:
Stripping away the semantics, this case most directly concerns gambling on sports. In 2018, the Supreme Court held that Congress could not bar the States from authorizing sports betting. Most States have since legalized the practice. In these States—and even in other States that have not legalized sports betting, like California and Texas—companies such as Kalshi now offer online sports betting through events contracts on the futures marketplace. Kalshi itself has called what it does “sports betting.” …
Even so, Kalshi makes a bold legal claim: it says that the States have no power to regulate its conduct, regardless of whether these so-called events contracts qualify as sports betting under state law. According to Kalshi, Congress—through obscure language within a special rule in the Commodity Exchange Act— subtly preempted the States from exercising authority over sports betting when that betting is offered through a so-called events contract. If that sounds farfetched, that is because it is. When Congress re- moves the States’ historic police powers, it does not whisper in the dark of night. Rather, courts expect Congress to speak clear as day when it intends a dramatic shift in our country’s traditional balance of power.
Notably, this brief also cites reporting from my other newsletter:
Tribal groups oppose Kalshi
Tribes rallied around support of the amicus in recent days, creating a broad coalition against nationwide sports betting via Kalshi.
From the brief:
KalshiEX LLC’s (“Kalshi”) unlawful and unfair entrance into the gaming market has adversely impacted tribal gaming revenue and the benefit of tribes’ bargained-for compacts. Additionally, by offering its so-called sports event contracts under the guise of commodity trading pursuant to the Commodity Exchange Act (“CEA”), Kalshi impedes tribes’ inherent sovereign right to regulate gaming activity on Indian lands. Contrary to Kalshi’s arguments: (1) the CEA does not govern its gaming-related sports event contracts; (2) such contracts are expressly prohibited by the CEA and Commodity Futures Trading Commission’s (“CFTC”) own regulations; and (3) federal, state, and tribal gaming laws therefore apply to the contracts (including IGRA).
AGA’s argument against Kalshi
From the opening of its brief:
AGA submits this brief to address the disruptive effects that Kalshi’s unlicensed sports wagers will have on the carefully crafted regulatory framework adopted by New Jersey and other states. Given the particular expertise and commitment of resources necessary for effective oversight of sports-betting markets, AGA is concerned that the Commodity Futures Trading Commission (“CFTC”) is not equipped to carry out the regulatory role traditionally played by state governments.
FanDuel’s Trusted Voices: Conversations About Betting is designed to equip adults, including parents and coaches, with tools and resources to talk to young people about gambling, including information on warning signs, risks and proxy betting. The program is led by retired professional basketball player Randy Livingston and his wife, basketball agent Anita Smith, who share their personal stories related to problem gambling, with the hope of preventing others from experiencing similar harms. Learn more and join the conversation here.
Gambling news roundup
There’s a lot of bad news for sweepstakes (and offshore gambling) today (hat tip to Dan Wallach for being the first to report these, as far as I can tell):
Louisiana Gaming Control Board Takes Strong Action Against Illegal Offshore Wagering and Online Sweepstakes Gaming (press release): “The Louisiana Gaming Control Board (‘the Board’) announced today a series of decisive enforcement actions to combat the rise of illegal offshore wagering and unauthorized online sweepstakes operations targeting Louisiana residents …In coordination with the Louisiana Attorney General's Office and the Louisiana State Police, Gaming Enforcement Division, the Board has taken a firm stance against illegal gambling operations that violate state law and jeopardize the integrity of the regulated market. Most notably, the Board recently issued a cease-and-desist order to Harp Media B.V., doing business as Bovada, requiring the company to immediately cease illegal online gambling activities within the state of Louisiana. Today, in a continued show of enforcement strength, the Board issued more than 40 additional cease-and-desist letters to offshore wagering platforms and online sweepstakes operators whose business models have been found to circumvent Louisiana gaming laws and regulations.”
It’s not immediately clear which sweepstakes operators got a C&D. A recent win for the sweepstakes industry was short-lived: The governor had vetoed a bill that would have expressly banned sweepstakes casinos.
Mississippi Gaming Commission Issues Cease and Desist Letters to Illegal Online Gaming Operators (press release): “The Mississippi Gaming Commission has issued cease and desist letters to multiple online gambling sites found operating illegally in Mississippi. Letters were issued electronically and by mail to companies operating sports wagering and/or online casinos in contravention of state and federal laws… ‘Our laws are clear that casino style gaming and sports wagering are not allowed online in Mississippi, outside of a licensed casino,’ MGC Executive Director Jay McDaniel said. ‘The MGC will aggressively pursue both domestic and offshore illegal operators, and the MGC is currently providing criminal case files to our state and federal law enforcement partners and requesting prosecution. Companies like those put on notice today mislead our residents by claiming to be legal outlets, when in fact they operate illegally and without providing any tax revenue or other tangible benefit to Mississippi.’”
The only sweepstakes operator that appears to have gotten a C&D is VGW via its Chumba Casino brand; list of operators from the MGC here.
New York Assembly Unanimously Passes Anti-Sweeps Bill (Casino Reports): “New York is a governor’s signature from becoming the fourth state to pass a bill banning online sweepstakes casinos in the legislative calendar year after Sen. Joseph Addabbo’s bill unanimously passed in the Assembly on Tuesday. Addabbo’s bill sailed through the Racing, Gaming, and Wagering Committee in the Senate committee he chairs prior to full Senate passage Friday. It was swapped in place for Assemblyperson Carrie Woerner’s companion bill since the two pieces of legislation contained identical language. Woerner’s bill also faced little resistance in the Assembly, passing through multiple committees in the lower chamber before the swap.”
Six basketball players face sanctions (UKGC): “The Gambling Commission’s Sport Betting Intelligence Unit (SBIU) supported investigations into match-fixing and regulation breaches within the former British Basketball League (BBL).
The investigations were led by the International Basketball Federation (FIBA) and the British Basketball Federation (BBF) respectively. Five former Surrey Scorchers players have received fines and sanctions ranging from 10-year bans to lifetime suspensions for manipulating match outcomes and failing to report corrupt activity during the 2022–2023 season. The FIBA led investigation, conducted in collaboration with the BFF, GB betting industry, and other partners, identified at least six compromised matches. Two players, Quincy Taylor and Charleston Dobbs, were sanctioned by the BBF with lifetime bans and fines. FIBA extended these sanctions globally. Three additional players — Shakem Johnston, Padiet Wang, and Joshua McFolley — were also sanctioned by FIBA, with lifetime or long-term suspensions.”
The Gambling Job Corner
Looking for a job in gambling? Or are you hiring for roles right now? Check out The Closing Line’s reverse job board, where job seekers post their availability.
If you’d like to promote some roles you’re hiring for, ping me and I’ll list them for free. Are you looking for a job? Send me a note and I’ll get a blurb in about you and link to your LinkedIn.
It's Not Gambling, It's Predicting (Bloomberg, paywall): “Kalshi offers a prediction market where you can bet on sports. No! Sorry! Wrong! It offers a prediction market where you can predict which team will win a sports game, and if you predict correctly you make money, and if you predict incorrectly you lose money. Not ‘bet on sports.’ ‘Predict sports outcomes for money.’ Completely different.”
WTA, ITF urge gambling industry to address sports betting-linked abuse (press release): “The WTA and ITF have today published the first ever season-wide report outlining the scale of abuse directed at players on social media – and are calling on the gambling industry to more effectively tackle those responsible.
The report findings are taken from Signify Group’s Threat Matrix service, which went live in January 2024, protecting players and tennis family members from targeted online hate, as well as threatening and violent direct communication.”
“Between January and December 2024, 1.6m posts and comments were analysed by Threat Matrix AI. Analysts then verified c8,000 posts/comments sent from 4,200 accounts as abusive, violent or threatening. Action has been taken against the most serious and prolific of these, including 15 accounts escalated to law enforcement.”
“During the year, 458 players were targeted with direct abuse or threat, five players received 26% of the total abuse identified, while 97 prolific accounts were responsible for 23% of all detected abuse.”
Penn Shareholders Preliminarily Seat Two New Board Members, Tells HG Vora Third Nomination ‘Out Of Order’ (InGame): “Penn Entertainment shareholders voted in two new board members, according to preliminary results announced Tuesday morning, despite activist investor HG Vora seeking three. The company’s annual meeting lasted about 12 minutes and lacked the fireworks some expected, given HG Vora’s public and brash campaign to seat three new members as Penn has argued only two spots were available. At the beginning of the meeting, held in person and via audio link for shareholders only, Mandy Lamb on behalf of HG Vora Capital Management LLC and HG Vora Special Opportunities Masterfund Limited made the nominations. She said the company is a holder of 100 common shares and “collectively with its affiliates, a very large shareholder. … The question now is, what happens next? HG Vora has been aggressively for months calling out Penn, its executives, and its digital gaming strategy, particularly around sports betting. The next step in a legal case that HG Vora filed in May is a July 10 hearing on a motion to expedite the trial and case management conference.”
Massachusetts Gaming Commission Discusses Blurred Line Between Entertainment, Traditional Sports Events (Sports Betting Dime): “The Massachusetts Gaming Commission will require licensed sports betting operators to notify the state’s sports wagering division if they want to accept bets on any non-standard events moving forward. The new decision came after a discussion on the 2024 Jake Paul vs. Mike Tyson certified boxing match, which saw a number of states prohibit bets on the event and featured several substantial rule changes from a typically certified boxing match. The Massachusetts Gaming Commission (MGC) unanimously agreed to the solution instead of requiring more strict regulation changes.”
MA Joint Committee Prepares For Online Casino Discussion (Legal Sports Report): “Massachusetts legislators will begin online casino discussions next week. Lawmakers scheduled a hearing June 23 for House Bill 332 and Senate Bill 235 in the Joint Committee on Consumer Protection and Professional Licensure. Sen. Paul Feeney and Rep. Daniel Cahill introduced the bills that would legalize online casinos in February.”
Greentube debuts in Delaware with exclusive BetRivers deal (SBC Americas): “Rush Street Interactive (RSI) has extended its partnership with gaming content supplier Greentube into a third North American market.
Greentube titles are now exclusively available in Delaware on RSI’s BetRivers platform. RSI is the Delaware Lottery’s iGaming provider last year.
BetRivers and Greentube already work together in New Jersey and Ontario, but Greentube’s games have never before been available to Delaware players. The companies also confirmed plans for a future launch in Pennsylvania.”
EveryMatrix lands second US aggregation deal with Delaware North (SBC Americas): “EveryMatrix secured its second content aggregation deal with an online casino operator. On Tuesday, the online casino software and content provider announced a partnership with Delaware North to provide iGaming content to Betly customers through its aggregation platform. EveryMatrix will leverage its SlotMatrix platform to deliver online casino content to Betly players in West Virginia. SlotMatrix has a content library of over 34,000 games and features EveryMatrix’s engagement integrations, including free spins and tournaments.”
Canadian Senator’s Anti-Sports Betting Ad Bill Off to Committee (Covers): “Ontario Sen. Marty Deacon’s Bill S-211, the National Framework on Sports Betting Advertising Act, received its second reading last Thursday and was referred to the chamber's Standing Committee on Transport and Communications. While Deacon has said a total ban on ads was her “initial aspiration, approach and dream,” legal questions about whether the potential harm of marketing mobile sports wagering approaches something like that of tobacco prompted a more nuanced approach with the legislation.”
IGT Lottery Becomes Brightstar Lottery (press release): “International Game Technology PLC announced today that its global lottery organization will begin doing business as Brightstar Lottery, effective immediately. Upon completion of the sale of IGT's Gaming and Digital business, which is expected to occur as early as July 1, 2025, to Voyager Parent, LLC, a holding company owned by funds managed by affiliates of Apollo Global Management, Inc., Brightstar will be a premier pure play lottery business designed to elevate lotteries and inspire players.”
Closing Line Consulting
Niche research and analysis? Startup advice? Help with your content? I have a consultancy to help clients in gaming and beyond. Learn more about CLC here.
Want to be a sponsor of this newsletter? Email dustin@closinglineconsulting.com.
