Is This the Supreme Court’s Next Sports Betting Case?

In Murphy v. National Collegiate Athletic Association (2018), the U.S. Supreme Court overruled a provision of federal law that had made it illegal for states to legalize sports gambling. “That provision unequivocally dictates what a state legislature may and may not do,” the Court said. “It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine.” Widespread state legalization (and regulation) of sports betting quickly followed from that decision.

Another big sports betting case is now likely headed for the Supreme Court. And once again, a duel over state vs. federal control is at its heart.

Last week, the U.S. Court of Appeals for the 9th Circuit sided with the Nevada Gaming Control Board in a case called KalshiEX v. Assad. Here is how the 9th Circuit summarized the legal dispute:

KalshiEX, LLC advertises itself as “the first app for legal sports betting in all 50 states.” As the volume of activity on Kalshi’s “sports betting” platform ballooned, the Nevada Gaming Control Board sent a cease-and-desist letter notifying Kalshi that it was violating Nevada statutes and gaming regulations. Kalshi sought injunctive relief, arguing that it is not a legal sports betting platform, but a designated contract market under the Commodity Exchange Act (CEA) offering legal sports event contracts. Kalshi argues that the Commodity Futures Trading Commission (CFTC) has exclusive regulatory authority over its sports event contracts and, therefore, Nevada’s gaming regulations do not apply.

To say that the 9th Circuit strongly rejected Kalshi’s position would be a bit of an understatement. “The substance of the sports event contracts offered on Kalshi’s [designated contract market] is sports gambling, regardless of whether Kalshi calls them swaps. Just as ‘[t]hat which we call a rose by any other name would smell as sweet,'” the court said, adding in a little Shakespeare for good measure, “placing sports bets, even when called by another name, is still gambling.”

That ruling by the 9th Circuit comes in the wake of an April decision by the U.S. Court of Appeals for the 3rd Circuit, which reached the opposite conclusion in a very similar case called KalshiEx v. Flaherty. According to the 3rd Circuit, it is federal regulators, not the New Jersey Division of Gaming Enforcement, who are the ones to hold sway over Kalshi’s “sports-related event contracts.”

In short, we have what is basically a textbook example of a circuit split. This kind of clear divide between two different federal appellate courts on such a pressing legal issue seems likely to garner the attention of the Supreme Court.

In Other Legal News

The U.S. Constitution grants Congress the authority “To exercise exclusive Legislation in all Cases whatsoever” over the District of Columbia. Relying on that authority, Congress has outlawed the construction of any “building or structure…on any reservation, park, or public grounds of the Federal Government in the District of Columbia without express authority of Congress.”

Yet yesterday the Supreme Court, by a vote of 5–4, allowed President Donald Trump’s demolition and renovation of the White House to proceed, despite the fact that Trump’s much ballyhooed ballroom has never been approved by Congress.

Why did the Court do it? According to the majority’s unsigned per curiam opinion, the historic preservationists who filed the legal challenge against Trump’s ballroom lacked the requisite standing needed to sue.

Writing in dissent, Chief Justice John Roberts, joined by Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson, faulted the majority not only for letting the “likely unlawful” demolition of the White House happen, but also for letting Trump get away with assuming powers that the Constitution never granted to the executive.

“The Court misconceives the plaintiff ‘s injury,” Roberts protested, “allowing the Executive’s likely infringement of the Legislature’s power of the purse and authority to regulate federal property in the District of Columbia to continue.”

I must say that I find Roberts’ dissent to be much more persuasive than the per curiam majority opinion. Yesterday’s decision, as the chief justice put it, was “no victory for the separation of powers.”