Thirty-nine states and the District of Columbia filed amicus briefs to the U.S. Supreme Court last week urging the justices to take up a case on whether sports-based prediction market contracts are financial swaps regulated by the CFTC or gambling products subject to state law. The filing represents the latest escalation in a jurisdictional clash that has divided federal appellate courts and drawn competing regulatory interpretations from the Commodity Futures Trading Commission.
One hundred forty-five tribal nations also submitted briefs to the Supreme Court, joining states in opposing what they characterize as federal overreach into their traditional regulatory authority over gambling. The briefs arrive as the CFTC simultaneously moved to clarify its own position: on Friday, October 10, the agency issued an interim final rule and a separate proposal that would formally classify sports, politics, cultural, and weather-related event contracts as swaps under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Circuit Split
Two federal appellate courts have ruled that prediction markets touching sports fall under state gambling law. A Third Circuit Court of Appeals panel, however, split 2-1 in the opposite direction, holding that the CFTC possesses jurisdiction over swaps and prediction market contracts involving sports outcomes. That appellate disagreement has created the legal pressure point now before the Supreme Court.
Chris Dodd, former U.S. Senator and former chair of both the CFTC and SEC, filed briefs arguing that the Dodd-Frank Act did not grant the CFTC authority to preempt state and tribal gambling laws. “Parlays that chain together multiple wagers, often on point spreads or player performances in different games, in different cities, in different sports, do not facilitate hedging or price discovery,” Dodd wrote in one brief. He added: “Nor is the CEA’s grant of ‘exclusive jurisdiction’ to the CFTC an express preemption provision immunizing every contract listed on a DCM from otherwise applicable state and tribal law.”
Gary Gensler, former CFTC Chair, similarly argued against federal preemption of state gambling regulation in his filing.
The CFTC’s Regulatory Move
The CFTC’s interim final rule clarifies that casino-style gambling falls outside its definition of swaps. Event contracts, however, remain within the agency’s regulatory purview. The separate proposal would formally expand that classification to include sports, politics, cultural, and weather-related events as event contracts counted as swaps.
The National Football League criticized the CFTC’s approach in its own submission, characterizing it as “laissez-faire” and noting the divergence between state gambling regulation and CFTC regulation of designated contract markets.
Kalshi, a prediction market provider, is at the center of the dispute. The Supreme Court has not yet indicated whether it will accept the case for review. Kalshi’s deadline to file its response to the Court is November 9, 2026.
