Gambling regulators have asked the U.S. Supreme Court to step in on prediction markets after lower courts issued conflicting rulings on Kalshi's sports event contracts. The split pits state gambling laws against federal CFTC oversight, as the sector's monthly volume tops $70 billion.
The fight over prediction markets has reached the U.S. Supreme Court. On October 3rd, the International Association of Gambling Regulators (IAGR) and the North American Gambling Regulators Association (NAGRA) asked the Supreme Court to intervene in the dispute over Kalshi's sports event contracts.
According to IAGR and NAGRA: "conflicting appellate decisions have created uncertainty as to whether regulators may apply state gambling laws". Their filing backs a formal appeal New Jersey made on September 2nd, which asked the court to clarify the reach of state gambling laws and overturn a ruling that favored Kalshi and the CFTC.
Lower courts split on sports contracts
The disagreement among courts deepened on October 2nd, when an Illinois federal district court sided with Kalshi, Coinbase, and the CFTC against state officials. Judge Martha M. Pacold found that Kalshi's event contracts are likely swaps under the Commodity Exchange Act.
Most states treat prediction markets tied to sports events as falling under their own gambling laws, but the CFTC claims sole oversight, saying the Commodity Exchange Act preempts state rules for its licensed entities. Sports betting lawyer Daniel Wallach said the Illinois decision creates an intra-circuit split with a Wisconsin ruling now on appeal to the Seventh Circuit.
In September, Kalshi sued Ohio and Tennessee but lost, as that court found sports-prediction contracts are not financial swaps and ruled that states can apply their gambling rules. New Jersey and Illinois, by contrast, upheld federal oversight led by the CFTC. The conflicting outcomes across jurisdictions are why the parties now want the Supreme Court to settle the question.
Volume crosses $70 billion
Prediction markets have grown into a multi-billion-dollar industry. In September alone, Polymarket and Kalshi together recorded $71 billion in volume, the highest monthly total yet. That growth has also drawn scrutiny over insider trading and triggered a congressional probe into the leading prediction market firms.
Source: AMBCrypto
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