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The land-based industry in Atlantic City is getting in on the action to shut down prediction markets from offering sports contracts.
The Casino Association of New Jersey, which represents all nine Atlantic City casinos, reached out to the Commodity Futures Trading Commission (CFTC) earlier this week. Their goal was to prevent operators such as Kalshi and Polymarket from offering sports contracts.
Predictions markets have caused an uproar across the country as the “sports contracts” they offer are similar to regulated NJ online sportsbooks. However, they are not regulated or taxed at the state level.
The plea from AC casinos
Atlantic City properties are defending the current regulations that are already set up in New Jersey, which prediction markets are not part of. Allowing prediction markets to operate nationally would essentially bring sports wagering to states where it’s illegal, such as Texas, Florida and California.
The Press of Atlantic City reported that Derek Shaffer, an attorney for the Casino Association, wrote that the CFTC would have extreme power over gaming in the country. He wrote:
“This proposal would turn the CFTC into a national gaming commissioner. Yet the proposal is even more remarkable in the eyes of those paying close attention: Considering the wide-ranging legislative judgments the CFTC would be making about what contracts to permit, it would have anointed itself, in substance, as a national gaming czar.
“Congress has not come close to authorizing the CFTC to oust states from playing their established, rightful roles as regulators of gaming activity.”
Kalshi filed its own comments earlier this week, stating that it “is federally regulated, fully collateralized, transparent, and subject to comprehensive surveillance.” That is the stance it has used in the past, too.
The American Gaming Association said that prediction markets have cost state governments over an estimated billion dollars in potential gaming taxes since 2025.
Legal update
So far, prediction markets have been successful in the New Jersey court system. The Third Circuit Court of Appeals awarded Kalshi a victory in April, ruling that federal law likely pre-empts the state’s ability to block the company’s sports-related event contracts.
Kalshi argued that sports contracts qualify as “swaps” under federal law, placing them under the CFTC’s exclusive jurisdiction. Judge Thomas Porter agreed in the majority opinion:
“Kalshi’s sports-related event contracts are swaps traded on a CFTC-licensed DCM, so the CFTC has exclusive jurisdiction.”
Senate President Pro Tempore Shirley Turner urged the state to file an appeal, as she argued:
“Contracts tied to the outcomes of sporting events and other real-world occurrences function like gambling, yet are not held to the same standards that apply in New Jersey.
“When something looks and operates like gambling, it is gambling.”
Right now, prediction markets have the upper hand, as they are still operating in the Garden State. However, Massachusetts, Michigan and Nevada recently experienced court wins against prediction markets.
Could that carry over into New Jersey? Only time will tell.
