Prohibition States and Legal Markets Unite: Why Idaho Joining a 39-State Coalition Against Kalshi Matters

Idaho bans all sports betting. Nevada is America’s gambling capital. Yet both states have signed onto the same coalition—alongside 37 other jurisdictions—filing amicus briefs across multiple federal circuits telling courts that prediction market platform Kalshi cannot use its CFTC designation to bypass state gambling laws. The coalition first filed a 49-page brief in the Fourth Circuit in December 2025, then followed with a Ninth Circuit filing supporting Nevada’s enforcement action. The Ninth Circuit’s March 19 denial of Kalshi’s emergency motion just made the coalition’s argument harder to ignore.

If you currently hold positions on Kalshi’s sports contracts, the legal ground beneath them is eroding faster than at any point in the platform’s history. The coalition filing across multiple circuits, the Ninth Circuit’s refusal to intervene, and the Nevada TRO are not isolated setbacks—they are a coordinated jurisdictional squeeze that threatens the 89% of Kalshi’s revenue that depends on sports.

What the Coalition Filing Means

The coalition’s legal strategy spans multiple circuits. The first salvo was a 49-page amicus brief filed December 22, 2025, in the Fourth Circuit Court of Appeals supporting Maryland’s case against Kalshi (KalshiEx v. Martin, No. 25-1892). The coalition then filed a separate brief in the Ninth Circuit supporting Nevada’s enforcement action—the filing that Idaho AG Raul Labrador formally announced on March 23, 2026. Across both filings, 39 jurisdictions are speaking with a single voice on what they see as a fundamental question: did Congress silently strip states of their centuries-old authority to regulate gambling when it gave the CFTC oversight of derivatives markets?

The coalition says the answer is unambiguously no. Their brief builds on three pillars: federalism (gambling regulation is a core state police power predating the Constitution), statutory interpretation (the Commodity Exchange Act was written for financial derivatives like interest rate swaps, not binary sports wagers), and consumer protection (state gambling frameworks provide safeguards the CFTC simply doesn’t have). The Supreme Court’s 2018 ruling in Murphy v. NCAA—which struck down the federal ban on state-authorized sports betting—serves as the coalition’s constitutional anchor, reaffirming that states retain sovereign authority over the legal war heading toward the Supreme Court.

The sheer size of the coalition matters as a legal signal. When 39 out of 51 jurisdictions align on a single legal position, it tells appellate judges this isn’t a fringe argument from one protectionist state. It’s a nationwide consensus that state sovereignty over gambling regulation is non-negotiable.

Why Idaho’s Participation Matters

Idaho is the coalition’s most powerful witness—precisely because it has nothing financial to protect. The state bans all forms of sports betting. It generates zero gaming tax revenue. It has no licensed sportsbooks or tribal gaming compacts covering sports. Idaho Attorney General Raul Labrador joined this coalition for one reason: to defend Idaho’s right to maintain its prohibition.

That’s what makes this coalition extraordinary. Nevada AG Aaron Ford co-leads the brief because Kalshi threatens the state’s $8 billion licensed sports betting industry. Idaho’s AG joined because Kalshi threatens the state’s right to say no. These are diametrically opposite gambling policies arriving at the same legal conclusion: the federal government cannot override state authority on gambling through a regulatory backdoor.

The Ninth Circuit Ruling That Changed Everything

On March 19, 2026, the Ninth Circuit Court of Appeals denied Kalshi’s emergency motion to block Nevada from enforcing its gaming regulations against the platform. The procedural significance was immediate: within 24 hours, Carson City District Judge Jason Woodbury issued a temporary restraining order prohibiting Kalshi from offering sports, election, and entertainment event contracts in Nevada.

The timing amplified the impact. March Madness—one of the highest-volume sports betting periods of the year—was underway. Kalshi’s core revenue driver was shut off in one of America’s most important gambling jurisdictions during peak season. The Nevada TRO that blocked Kalshi during March Madness demonstrated that state enforcement can move fast once federal courts clear the path.

Kalshi's Federal Preemption Argument

Kalshi's legal theory is straightforward: Congress granted the CFTC exclusive jurisdiction over transactions on Designated Contract Markets under the Commodity Exchange Act. Since Kalshi holds DCM status—approved by the CFTC in 2020—its event contracts are exclusively federal matters. State gambling laws, in Kalshi's view, are entirely preempted.

The theory has found some traction. A New Jersey federal court sided with Kalshi in April 2025, and a Tennessee federal court followed in February 2026. But courts in Nevada, Maryland, and Massachusetts have reached the opposite conclusion, creating the circuit split forming across federal courts that may ultimately require Supreme Court resolution.

"Nevada is the foundational home of sports wagering, and states, not federal financial regulators, have decades of experience protecting consumers, preserving the integrity of sporting events, and addressing real world harms such as underage gambling."
— Nevada Attorney General Aaron Ford

The States' Three Core Arguments

The coalition's 49-page brief advances three distinct but reinforcing arguments against Kalshi's preemption theory. Each targets a different weakness in the platform's legal position.

First, federalism. Gambling regulation has been a core state police power since before the founding of the republic. The Supreme Court recognized this in Ah Sin v. Wittman (1905), and Murphy v. NCAA (2018) reaffirmed that Congress cannot commandeer state regulatory authority over sports betting. The coalition argues that courts should apply the "federalism canon"—a principle requiring Congress to speak clearly when it intends to shift states' historic powers to the federal government. Congress never mentioned gambling, sports betting, or state gaming laws when it wrote the CEA.

Second, statutory interpretation. The Commodity Exchange Act was designed to regulate financial derivatives—interest rate swaps, commodity futures, options contracts. It was not designed for binary-outcome consumer wagers on whether the Chiefs will cover the spread. The coalition points out that Congress amended the CEA through Dodd-Frank in 2010 to address the financial instruments that caused the 2008 crisis, not to create a federal framework for sports gambling.

Third, consumer protection. State gambling commissions enforce age minimums (21 in most states, versus 18 under CFTC rules), operate responsible gambling programs, maintain self-exclusion lists, regulate advertising, and provide state-level dispute resolution. The CFTC has none of these tools. If Kalshi's preemption theory prevails, these protections would vanish for any gambling product rebranded as an "event contract." The states argue this outcome was never Congress's intent—especially given that sports contracts account for 89% of Kalshi's fee revenue (according to data cited in the Massachusetts court ruling) and that Kalshi's March 2026 $1 billion raise doubled its valuation from $11 billion to $22 billion, fueled overwhelmingly by that sports volume.

What Happens Next

The most consequential date on the calendar is April 16, 2026, when the Ninth Circuit hears oral arguments in the consolidated Kalshi, Robinhood, and Crypto.com cases. This is where the federal preemption question gets argued at the circuit level—and where the coalition's amicus brief actually lands. The April 3 preliminary injunction hearing before Judge Woodbury in Carson City matters too: if the court converts the TRO into a longer-term injunction, Kalshi stays locked out of Nevada throughout the litigation.

The states aren't just fighting Kalshi—they're fighting a captured regulator. CFTC Chairman Mike Selig is the sole sitting commissioner on what is supposed to be a five-member panel, with four seats unfilled over a year into the Trump administration. Selig has filed amicus briefs on behalf of the very platforms his agency regulates, criticized Arizona's criminal charges against Kalshi as "entirely inappropriate," and initiated a formal rulemaking process to expand prediction markets. The political entanglements run deeper: Donald Trump Jr. serves as a paid advisor to Kalshi and an investor in Polymarket through his venture fund 1789 Capital. Crypto.com—a co-defendant in the Ninth Circuit cases—has a partnership with Trump's Truth Social to offer prediction markets, and made a $5 million donation to MAGA Inc. on January 23, 2026. Twenty-five days later, the Trump administration's CFTC filed an amicus brief backing Crypto.com in federal court.

Beyond the Ninth Circuit, the legal landscape is fracturing across multiple courts simultaneously. The Fourth Circuit will hear the Maryland appeal where the coalition's original December 2025 amicus was filed. The Third Circuit is expected to hear the New Jersey appeal around September 2026. The Sixth Circuit may consolidate the Ohio and Tennessee cases where judges 270 miles apart reached opposite conclusions. If the circuits reach conflicting results—and they already have—the Supreme Court becomes the inevitable destination.

The federalism argument extends beyond state governments. Thirty tribal gaming organizations—including the Indian Gaming Association, the National Congress of American Indians, and 22 federally recognized tribes—have filed amicus briefs opposing federal preemption of sports event contracts. As Ohio Chief Judge Sarah Morrison warned in a footnote that legal observers have called the most consequential aside in the entire litigation, treating sports contracts as federally regulated swaps "would have a seismic impact on Indian tribes' authority to regulate gaming on tribal land." Tribal gaming operates under compacts negotiated with state governments under the Indian Gaming Regulatory Act. If prediction market contracts bypass state law, they bypass tribal compacts too—meaning platforms could offer sports betting nationwide without tribal consent and without the revenue-sharing agreements that sustain tribal economies. For a deeper analysis of the tribal dimension and the Ohio ruling, see our coverage of the Sixth Circuit split between Ohio and Tennessee.

Sources

• AG Labrador Defends Idaho's Authority to Regulate Sports Betting — Idaho Attorney General's Office
• Nevada AG Aaron Ford Leads Effort to Assert States' Rights to Regulate Sports Betting — 8 News Now
• KalshiEx LLC v. John Martin, Case No. 25-1892 — Fourth Circuit Court of Appeals Docket
• Prediction Market Leader Kalshi Suffers Legal Blow as Nevada Court Rules Platform Subject to State Gaming Laws — National Law Review
• Prediction Markets at a Crossroads: The Continued Jurisdictional Battle Over Event Contracts — Holland & Knight
• Kalshi Raises $1 Billion, Doubling Valuation to $22 Billion — Bloomberg
• States Amicus Brief, Ninth Circuit (Nevada Consolidated Cases) — Nebraska Attorney General's Office