Supreme Court Review Emerges as Key Battleground for Prediction Market Rules -

The U.S. Supreme Court has not indicated whether it will take up the legal dispute over prediction markets, but pressure for judicial review is building. Multiple groups have filed amicus briefs, while the Commodity Futures Trading Commission (CFTC) has issued an interim final rule and proposed additional guidance on how these contracts should be treated.

Last week, former officials, state governments, tribal nations and industry groups urged the Supreme Court to decide whether contracts tied to sports outcomes qualify as swaps under federal law. The CFTC added to the debate on Friday by releasing two regulatory measures outlining its interpretation of these products.

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Prediction Markets Become the Focus of a Legal Showdown

States and Industry Groups Seek Supreme Court Intervention

Former Senator Chris Dodd, former CFTC and SEC Chair Gary Gensler, the National Football League (NFL), 39 states and the District of Columbia, 145 tribal nations, and other parties have filed amicus briefs asking the Supreme Court to hear the case.

Many of the submissions argue that contracts based on sporting events are wagers rather than financial swaps. Under this view, state authorities should regulate these markets instead of leaving them primarily under the CFTC’s oversight.

The legal conflict has intensified because federal appeals courts have reached different conclusions. Two courts have treated sports-related prediction markets as gambling products subject to state laws, while another has ruled that the CFTC has jurisdiction. The split has increased the possibility that the Supreme Court may eventually resolve the disagreement.

Dodd Disputes the Scope of the CFTC’s Authority

Dodd, who helped shape the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act, argued that the legislation was not intended to let the CFTC override state governments’ authority over gambling.

His brief challenged a 2-1 decision by a Third Circuit Court of Appeals panel that placed sports-related prediction contracts under the agency’s jurisdiction. Dodd maintained that financial derivatives and sports wagers are fundamentally different products.

The filing cited parlays, which combine several bets involving different games, sports, point spreads or player performances. It argued that these wagers do not support hedging or price discovery and may not meet the Commodity Exchange Act’s requirements for contracts with potential financial, economic or commercial consequences.

Dodd also questioned the CFTC’s claim to exclusive jurisdiction over these products. According to his filing, the law’s exclusive-jurisdiction provision identifies the federal regulator for covered financial instruments but does not automatically shield every contract listed on a designated contract market (DCM) from state and tribal laws.

Gensler, who played a major role in developing regulations under Dodd-Frank, has similarly argued that the law does not give the CFTC authority to preempt state gambling regulations. He has made comparable arguments in an appellate court case.

NFL Criticizes the CFTC’s Approach

The NFL has also asked the Supreme Court to consider the dispute, citing its significant interest in the relationship between sports and betting.

The league criticized what it described as the CFTC’s “laissez-faire” approach to prediction markets. It also highlighted the regulatory differences between state oversight of gambling companies and federal supervision of designated contract markets, the licensing structure used by prediction market operators.

CFTC Outlines Its View of Event Contracts

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 said casino-style gambling falls outside that definition, while event contracts remain covered. The proposal would specifically include contracts linked to sports, politics, cultural events and weather among the event contracts treated as swaps.

The new measures set out the CFTC’s position as the courts continue to examine the boundary between federal commodities regulation and state gambling laws.

Prediction market platform Kalshi has received an extension to submit its response to the Supreme Court. Its revised deadline is November 9, 2026.