Friday marked the end of a hectic period filled with court filings, regulatory scrutiny, and significant movements within the gambling sector, particularly in prediction markets and sports betting sponsorships.
The recent developments in Connecticut have been particularly noteworthy, as the federal government has taken steps to prevent the state from enforcing its gambling regulations against prediction markets. In a related move, Robinhood has sought to join the ongoing legal proceedings.
In a significant action, the Commodity Futures Trading Commission (CFTC) has petitioned a federal judge to halt Connecticut's enforcement of its gambling laws concerning prediction markets. This motion for a preliminary injunction was filed on September 11 in the U.S. District Court for the District of Connecticut, following the state’s aggressive enforcement efforts, which included cease-and-desist orders against nine prediction market platforms and nearly 30 subpoenas linked to the investigation.
On the same day, Robinhood requested to intervene in the CFTC's lawsuit against Connecticut, citing its receipt of a cease-and-desist order from the state as a reason for its direct interest in the case. Connecticut has expressed no opposition to Robinhood's involvement.
These developments come on the heels of a federal judge's denial of Kalshi’s request for a preliminary injunction and a subsequent appeal in August, prompting Connecticut to file an enforcement lawsuit against the exchange.
In another legal maneuver, Crypto.com has aligned with Robinhood in appealing to the U.S. Supreme Court to review a Ninth Circuit ruling that permits Nevada to enforce its gambling laws on sports event contracts. The North American Derivatives Exchange filed its petition on September 11, following Robinhood's separate filing the previous week.
The Ninth Circuit had ruled on August 28 that the Commodity Exchange Act (CEA) does not supersede Nevada's authority over these contracts. Meanwhile, Kalshi is seeking an en banc rehearing, and New Jersey has also requested the Supreme Court to review a Third Circuit ruling in Kalshi's favor.
In a separate case, a federal judge in Wisconsin has allowed Kalshi and Robinhood to pursue an immediate appeal regarding the Ho-Chunk Nation’s challenge to sports event contracts on tribal lands. U.S. District Judge William Conley has certified two questions for interlocutory appeal concerning whether the CEA or the Unlawful Internet Gambling Enforcement Act limits the Nation’s regulatory authority under the Indian Gaming Regulatory Act.
Conley previously determined that federal commodities law does not undermine the Ho-Chunk Nation’s ability to regulate sports contracts on tribal lands. The case is currently on hold as the defendants seek the Seventh Circuit's permission to appeal, with Conley noting the conflicting rulings across the country and predicting that the case will ultimately reach the Supreme Court.
In other news, Kalshi has communicated with its customers regarding the resolution of player-participation contracts after removing injury-related markets earlier this month. The exchange confirmed that existing contracts would be settled based on the outcomes from Week 1, with winning positions being paid out normally, while customers with losing positions would receive reimbursement for their costs.