Prediction Markets Face Growing Push for Supreme Court Review: State of Crypto

The U.S. Supreme Court has not yet said whether it will hear the growing legal dispute over prediction markets. However, the issue has attracted multiple amicus briefs, an interim final rule and a separate regulatory proposal.

Last week, several groups and individuals urged the Supreme Court to consider whether prediction market contracts tied to sporting events qualify as swaps under federal commodities law. On Friday, the Commodity Futures Trading Commission (CFTC) also issued two measures outlining its position on how these products should be classified, including an interim final rule that has taken effect.

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Dodd’s Position: The CFTC Should Not Override States

The Bigger Picture

Former U.S. Senator Chris Dodd, former Commodity Futures Trading Commission and Securities and Exchange Commission Chair Gary Gensler, the National Football League (NFL), 39 states and the District of Columbia, 145 tribal nations, and other parties submitted amicus briefs urging the Supreme Court to review the dispute.

Many of the filings argue that sports-related prediction market contracts are not swaps and should not fall under the CFTC’s regulatory authority.

The possibility of Supreme Court involvement was discussed in this newsletter a month ago, and the legal situation has since become more significant. A split has emerged among federal appellate courts: two have ruled that sports-related prediction markets are gambling products subject to state regulation, while another has concluded that they fall under the CFTC’s jurisdiction.

Examining the Legal Arguments

Most of last week’s amicus briefs called on the Supreme Court to support the states’ position. Under this interpretation, at least some sports prediction markets should be treated as gambling activities governed by state laws rather than as federally regulated financial products.

Former Senator Chris Dodd, whose name is attached to the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act at the center of the dispute, argued that the legislation was never designed to let the CFTC override state governments’ authority to regulate gambling.

His brief challenged a 2-1 decision by a panel of the Third Circuit Court of Appeals, which found that the CFTC had jurisdiction over swaps and prediction markets linked to sporting events. Dodd’s filing distinguished financial derivatives from wagers on sports outcomes.

The brief argued that parlays combining multiple bets—such as point spreads or player performances across different games, cities and sports—do not serve the traditional financial purposes of hedging or price discovery. It also disputed whether these products have the potential financial, economic or commercial consequences required to qualify as swaps under the Commodity Exchange Act (CEA).

Dodd’s filing also challenged the CFTC’s claim that it has exclusive jurisdiction over these contracts. It argued that the CEA’s grant of exclusive jurisdiction does not automatically exempt every contract listed on a designated contract market (DCM) from applicable state and tribal laws. Instead, the filing said, the provision establishes the CFTC as the federal regulator for financial instruments covered by the law.

Former CFTC Chair Gary Gensler, who helped shape regulations implementing Dodd-Frank, made a similar argument, saying the law did not authorize the agency to override state gambling regulations. He has advanced a comparable position in an appellate court case.

The NFL also filed a brief, citing its substantial interest in the outcome because of the central role sports betting plays in the sports industry. The league criticized what it characterized as the CFTC’s relaxed regulatory approach and highlighted the differences between state oversight of gambling operators and federal regulation of designated contract markets, the licensing category used by prediction market platforms.

CFTC Moves to Clarify Its Position

On Friday, the CFTC issued an interim final rule and a separate proposed rule addressing how prediction market products fit within the legal definition of a swap.

The agency stated that casino-style gambling falls outside its definition of swaps, while event contracts remain within that category. It also proposed explicitly recognizing contracts tied to sports, politics, cultural events and weather as event contracts that qualify as swaps.

These actions outline the regulator’s interpretation as the courts continue to consider where federal commodities law ends and state gambling authority begins.

Kalshi, a prediction market operator, requested and received an extension to submit its response to the Supreme Court. Its new deadline is November 9, 2026.

This Week

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