Amicus Brief Supports Maryland in Kalshi Sports Predictions Market Dispute

An amicus brief recently filed in Kalshi’s ongoing legal fight with Maryland This fuels a growing debate over who should regulate sports-related prediction markets, federal commodity regulators or state gambling authorities.

In a deposit sent to the U.S. Court of Appeals for the Fourth Circuit, Todd Phillips, an assistant professor of legal studies at Georgia State University, says many of the sports-related contracts offered by KalshiEx LLC are “unlikely to be commodity derivatives.” For this reason, he asserts that they would not fall under the “exclusive jurisdiction” of the Commodity Futures Trading Commission (CFTC). If the courts ultimately accept this view, Phillips argues, Maryland’s gambling laws will not be preempted.

I just filed an amicus brief in Kalshi’s lawsuit against Maryland, arguing that the sports-related contracts listed by Kalshi are unlikely to be commodity derivatives, so the CFTC did not "exclusive jurisdiction" on them and Maryland gaming laws are not preempted. 1/ pic.twitter.com/flARj6aqHx

–Todd Phillips (@tphillips) December 22, 2025

Maryland Amicus Brief Against Kalshi Filing Says Sporting Events Are Not Commodities

“I just filed an amicus brief in Kalshi’s lawsuit against Maryland, arguing that the sports-related contracts listed by Kalshi are unlikely to be commodity derivatives, so the CFTC does not have ‘exclusive jurisdiction’ over them and Maryland’s gaming laws are not preempted,” Phillips wrote in a series of posts on X announcing the filing.

The brief sets out what Phillips describes as three main arguments. First, it asserts that Congress enacted the Commodity Exchange Act (CEA) to regulate financial instruments intended to hedge economic risk.

As his article summarizes: “No financial risk, no derivative. No derivative, no federal preemption.” The brief also states that Congress intended the CEA to apply to “commodity derivative contracts that could reasonably be expected to be used for hedging purposes on a more than occasional basis,” and not to contracts lacking significant economic consequences.

Second, Phillips argues that sporting events are generally not considered commodities because they are not tied to the type of financial or commercial consequences that would make the contracts useful for hedging purposes. He cites examples of contracts offered on Kalshi’s platform, including bets tied to in-game commentary. “Kalshi offers a contract where an announcer says ‘what take’ during a broadcast,” he wrote. “This contract may not be used for hedging purposes under any circumstances.”

In his brief, Phillips points out that this position is consistent with Kalshi’s own prior statements. He cites Kalshi’s filing in the U.S. Court of Appeals for the D.C. Circuit, in which the company said that “contracts relating to gaming — again, to activities conducted for the purpose of diversion or entertainment — are unlikely to serve any ‘commercial or hedging interest.’

Third, Phillips argues that it is ultimately up to the courts, not regulators or exchanges, to decide whether a contract can be considered a commodity derivative. “Just because Kalshi has self-certified that a contract is a derivative, or even if the CFTC agrees that a contract is a derivative,” he wrote. “The courts decide.”

Maryland warns against predictive markets

The filing comes as state regulators take a closer look at prediction markets. In November, Maryland becomes latest state to warn license holders on the offering of these products, joining a growing number of jurisdictions questioning whether they constitute illegal gambling. Under Maryland law, online gaming, mobile sports betting, and online fantasy sports competitions are only permitted when offered by state-licensed operators.

Earlier, on August 13, a filing in the U.S. District Court for the District of Maryland indicated that Kalshi received written assurances from the Maryland Lottery and Gaming that the agency would not enforce state gambling laws against the company while his appeal is still pending. In correspondence cited in the case, the regulator said its “decision constitutes the final determination as to whether gambling is legally operated in the state.”

Phillips’ brief takes no position on whether the CEA ultimately overrides state gaming laws. Instead, it argues that preemption can only occur if a court first determines that the contracts in question are commodity derivatives that fall within the exclusive jurisdiction of the Commodity Futures Trading Commission. If not, the brief concludes, “state law is certainly not preempted.” The appeal is still pending at the time of writing.

Featured image: Kalshi / Canva

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