Plus: SCOTUS allows Trump’s White House ballroom construction to proceed.
In Murphy v. National Collegiate Athletic Association (2018), the United States Supreme Court overturned a federal rule that barred states from legalizing sports wagering. “That provision unequivocally dictates what a state legislature may and may not do,” the Court stated. “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.” Following that ruling, a broad wave of states moved to legalize and regulate sports betting.
Another major sports betting dispute now appears headed toward the Supreme Court, and at its core lies a renewed clash over who should regulate this activity: states or the federal government.
Last week, the U.S. Court of Appeals for the 9th Circuit ruled in favor of the Nevada Gaming Control Board in KalshiEX, LLC v. Assad. Kalshi presents itself as “the first app for legal sports betting in all 50 states.” As activity on Kalshi’s designated platform surged, the Nevada Authority sent Kalshi a cease-and-desist notice, accusing the firm of violating Nevada’s statutes and gaming rules. Kalshi sought a provisional remedy, arguing that it is not merely a sports betting site but a designated contract market under the Commodity Exchange Act (CEA) that offers lawful sports event contracts. Kalshi contends that the Commodity Futures Trading Commission (CFTC) possesses exclusive regulatory authority over these sports-related contracts, and thus Nevada’s gaming regulations should not apply.
To say that the 9th Circuit strongly rejected Kalshi’s position would be 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 wrote, adding a touch of Shakespeare for emphasis, “placing sports bets, even when called by another name, is still gambling.”
That ruling by the 9th Circuit follows an April ruling from the U.S. Court of Appeals for the 3rd Circuit in KalshiEx v. Flaherty, which reached the opposite conclusion. The 3rd Circuit held that federal regulators, not the New Jersey Division of Gaming Enforcement, oversee Kalshi’s “sports-related event contracts.” In short, this situation represents a textbook circuit split, a divergence between two federal appellate courts on a pivotal legal issue that is likely to draw the attention of the Supreme Court.
In Other Legal News
The Constitution of the United States assigns Congress the authority “To exercise exclusive Legislation in all Cases whatsoever” over the District of Columbia. On that basis, Congress has prohibited the erection 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 on a 5–4 vote, the Supreme Court permitted President Donald Trump’s demolition and renovation of the White House to move forward, even though Congress has never expressly approved the plan for the president’s much-publicized ballroom.
What motivated the Court’s decision? The majority, in an unsigned per curiam opinion, held that the historical preservationists who challenged the ballroom lacked the standing required to sue. In a dissent, Chief Justice John Roberts, joined by Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson, criticized the majority—not only for allowing what they called a likely unlawful demolition of the White House to continue, but also for enabling the executive branch to assume powers the Constitution does not confer upon it.
“The Court misconceived the plaintiff’s injury,” Roberts asserted, “allowing the Executive’s likely infringement of the Legislature’s power of the purse and the authority to regulate federal property in the District of Columbia to continue.” I find Roberts’ dissent notably more persuasive than the per curiam ruling. As the chief justice described yesterday’s decision, it represented “no victory for the separation of powers.”
