The battle between regulated sportsbooks and event predictions markets continues to rage this week as New Jersey Attorney General Matt Platkin provided a judge with his opinion on the matter. Platkin did not hold back in his arguments suggesting that sports contracts are very much subject to state law and are clearly doing an end run around state gaming regulations.
New Jersey, along with Nevada, are furiously trying to extinguish the growing popularity of sports contracts because their providers don’t have to pay state taxes. In Platkin’s argument he makes it very clear that contract providers like Kalshi cannot use the Commodities Exchange Act (CEA) as a cover for an end-run around state laws saying, “Like many other States, New Jersey has regulated gambling for over 125 years. Plaintiff KalshiEX, LLC thinks it is exempt from those laws simply because it offers sports wagers in a new format (called event contracts) on a market designated by the Commodity Futures Trading Commission (CFTC). Kalshi is wrong. There is no doubt that if the Commodity Exchange Act (CEA) applies to Kalshi’s sports wagers, Kalshi must comply with the CEA in order to list them on a CFTC-designated market. But it cannot do so in violation of state law.”
Platkin also used Kalshi’s arguments from their efforts to allow contracts on elections from last year, in which the company itself said that contracts based on sporting events would not be legal.
For its part, Kalshi is defiantly confident about the issue. Kalshi CEO Tarek Mansour recently said his outfit is, “not necessarily very concerned [because] we are regulated at the federal level. The state law doesn’t really apply,” in comments reported on by Covers.com.