For millions of Americans, the future of trading sports event contracts could depend on how the Supreme Court interprets a law passed after the 2008 financial crisis.
- A Supreme Court ruling against Kalshi could restore state gambling oversight and end sports contract access for millions of Americans.
- The NFL, tribal governments, and state officials argue the contracts undermine gaming safeguards and sovereign authority.
- Dodd-Frank coauthor Christopher Dodd and former CFTC chairman Gary Gensler argue Congress never authorized a national sports betting system.
In April, the Third Circuit determined Kalshi’s sports event contracts qualified as federally regulated “swaps” and were not subject to state-level gaming enforcement. New Jersey officials have challenged that ruling, asking the Supreme Court to overturn the lower court’s decision and allow the state to enforce its gambling laws against these event contracts.
At the heart of the dispute is the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which Congress passed to overhaul financial regulation, including oversight of swaps - contracts commonly used to manage financial risk. Kalshi and other leading prediction markets argue their sports contracts fit the law’s definition of swaps and fall under the Commodity Futures Trading Commission’s exclusive jurisdiction, meaning they aren’t subject to state-level gambling regulation.
Opponents of Kalshi’s position, including state officials, gaming industry groups, and professional sports leagues, argue Congress never intended Dodd-Frank to authorize nationwide sports betting. A Supreme Court decision siding with these groups and rejecting Kalshi’s federal protection could effectively end access to current sports prediction market offerings for millions of Americans.
The justices have not yet agreed to hear the case. But two other circuits this year have ruled against prediction markets and for state regulators, creating an environment legal experts believe is ripe for the Supreme Court to take up the case, possibly as early as this year.
This week the NFL, 145 tribes and tribal organizations, 39 states, and the coauthor of the Dodd-Frank Act were among those to submit briefs supporting New Jersey’s challenge. Here are the five most important arguments.
1. NFL: Insider-trading safeguards require knowing who insiders are
“Unless operators like Kalshi coordinate with sports leagues to obtain and maintain current, league-specific prohibited-bettor lists, their nominal insider-trading policies or prohibitions are paper tigers.”
The NFL argued in its brief that prediction market platforms cannot effectively prevent trading by league employees, team personnel, or medical professionals treating injured players without identifying those insiders. It acknowledges federal insider-trading rules and Kalshi’s partnership with an integrity-monitoring provider but questions how those protections can work without coordination with the league.
The league also wants platforms to prohibit contracts that can be manipulated by one person, depend on injuries or misconduct, hinge on officiating decisions, or involve outcomes knowable in advance. Its brief says the CFTC and exchanges have resisted core safeguards despite repeated requests.
2. Tribes: Prediction markets are the latest outsiders extracting tribal resources
“Today’s prospectors are so-called prediction markets. And like the prospectors of old, Kalshi and its ilk are infringing tribal sovereignty and threatening a vital tribal resource.”
In sharp language, the brief from 145 tribes and tribal organizations compares prediction platforms to prospectors who historically took resources from tribal lands. It argues Kalshi offers sports betting within tribal jurisdictions without their authorization, including on lands where tribes have exercised their sovereign right to prohibit gaming.
For tribes that operate casinos and sportsbooks, the dispute also concerns critical funding for healthcare, housing, education, and public safety. The brief argues prediction platforms compete for that revenue while avoiding required compact negotiations, revenue-sharing obligations, and gaming regulations that tribal operators must follow.
3. Gary Gensler: Congress could not have transferred gambling authority without anyone noticing
“If Dodd-Frank had preempted the states and tribes on sports betting, it would have been one of the biggest stories about Dodd-Frank at the time. But nobody ever mentioned it.”
Former CFTC chairman Gary Gensler helped implement Dodd-Frank and argues neither Congress nor federal regulators acted as though the law had transferred sports betting oversight to his agency. His brief goes on to say sports betting wasn’t mentioned during his 54 appearances before Congress as chairman, and the CFTC did not seek the resources necessary to become a national gambling regulator.
Gensler also identifies a consequence he considers implausible: “If Congress swept sports betting into the swap definition, then all off-exchange retail sports bets since October 2012 have been illegal.” He says that interpretation would reach wagers placed at casinos, through online sportsbooks, or even between friends.
4. Christopher Dodd: Unqualified regulators are overseeing gambling
“It should not be converted into a source of immunity for federally licensed sports gambling under the jurisdiction of an agency with no expertise on that matter.”
Former Sen. Christopher Dodd, a namesake sponsor of Dodd-Frank, argues Congress sought to strengthen financial oversight while preserving state and tribal gambling authority. His brief lays out how derivatives that manage existing commercial risks differ from sports wagers that create a bettor’s financial exposure.
Dodd also challenged the idea that listing a wager on a federally registered exchange should determine whether state gambling laws apply. He argues that approach allows substantially identical bets to receive different treatment based on the platform offering them while removing gambling protections Congress never replaced with an equivalent federal framework.
5. States: Platforms gain while governments and consumers lose
“States lose core sovereign powers. Citizens lose critical protections. But prediction markets walk away with a bigger bottom line. That is not a trade-off that this Court should accept.”
Attorneys general from 39 states and Washington, D.C., argued in a joint brief that prediction platforms cannot strip governments of their longstanding gambling authority by relabeling wagers as financial contracts. Their brief emphasizes that states make different choices: Some authorize and regulate sports betting, while others prohibit it.
