The Prediction-Market Fight Is Now at the Supreme Court’s Door

Rapid Response / Legal Alert | September 12, 2026

Three petitions do not make a Supreme Court case.

But they make this one considerably harder to ignore.

On September 11, North American Derivatives Exchange, Inc.—the entity doing business as Crypto.com Derivatives North America—filed a petition asking the U.S. Supreme Court to review the Ninth Circuit’s ruling that Nevada may apply its gambling laws to Crypto.com’s sports event contracts. The filing makes Crypto.com the third party to seek Supreme Court review of the rapidly expanding prediction-market fight, following New Jersey and Robinhood.

The important part is not the number of petitions.

It is why they exist.

The Third and Ninth Circuits have now interpreted the same federal statute in opposite ways. The Third Circuit concluded that sports event contracts offered on a federally regulated designated contract market can qualify as “swaps” subject to the Commodity Futures Trading Commission’s exclusive jurisdiction, leaving New Jersey’s gambling laws preempted. The Ninth Circuit concluded that substantially similar sports contracts are not swaps at all and therefore are not insulated from Nevada gambling regulation.

That creates a basic national problem:

Is a sports prediction contract a federally regulated derivative, a state-regulated wager—or somehow both?

The Supreme Court is now being directly asked to answer it.

What happened: Crypto.com filed a Supreme Court petition on September 11 challenging the Ninth Circuit’s decision allowing Nevada to regulate its sports event contracts. New Jersey and Robinhood have already filed their own petitions arising from the same broader legal conflict.

Why it matters: The Third and Ninth Circuits have reached opposite interpretations of the Commodity Exchange Act. In one circuit, federal commodities law can displace state gambling regulation. In another, states remain free to regulate sports prediction contracts as wagering.

What comes next: The Supreme Court must first decide whether to hear any of these cases. It has not granted review. A direct circuit conflict is an important reason the Court considers when deciding whether to grant certiorari, but it does not guarantee that four Justices will vote to take the case.

The dispute starts with one word in federal law:

“Swap.”

The Commodity Exchange Act gives the CFTC exclusive jurisdiction over certain transactions involving swaps traded on federally regulated designated contract markets, or DCMs. Dodd-Frank defines a swap broadly enough to include some contracts whose payment depends on whether an event or contingency occurs and whether that event has a potential financial, economic, or commercial consequence.

Prediction-market operators argue that sports event contracts fit inside that federal framework.

If they are right, that matters enormously.

A state cannot ordinarily use its own law to regulate something Congress placed exclusively within a federal regulator’s domain.

And that is essentially what the Third Circuit held in KalshiEX LLC v. Flaherty on April 6.

By a 2–1 vote, the Third Circuit upheld a preliminary injunction blocking New Jersey from enforcing its sports-gambling laws against Kalshi. The majority concluded that Kalshi’s sports contracts fit the statutory definition of swaps and that both field and conflict preemption supported keeping New Jersey regulators out of the federally regulated DCM.

New Jersey has now asked the Supreme Court to reverse that decision. Its petition frames the question directly: whether Dodd-Frank preempted states from regulating sports bets within their jurisdictions simply because the bets are offered on CFTC-registered markets.

Then came Nevada.

On August 28, the Ninth Circuit went the other way.

In a published opinion involving Kalshi—and related rulings involving Crypto.com and Robinhood—the court concluded that sports event contracts of this kind are not swaps within the Commodity Exchange Act’s meaning. The court emphasized the economic substance of the product: a customer puts money at risk based on a sports outcome and receives more money if the prediction is correct. In the Ninth Circuit’s view, calling that transaction an “event contract” does not transform a sports wager into the kind of swap Congress placed exclusively under CFTC jurisdiction.

Crypto.com’s related appeal received the same answer: its sports contracts were not swaps, so the CFTC’s exclusive-jurisdiction provision did not preempt Nevada’s gambling laws.

Robinhood then petitioned the Supreme Court.

Crypto.com followed Friday.

Now both sides of the split are asking the Justices to intervene.

Until recently, the prediction-market war consisted mostly of scattered litigation:

one state, one regulator, one federal judge, one preliminary injunction.

That system could survive for a while even with inconsistent trial-court decisions.

A circuit split is different.

The Third Circuit says the federal commodities regime can preempt state sports-gambling law for these products.

The Ninth Circuit says the products are sports bets rather than swaps and therefore fall outside the federal exclusivity on which the operators rely.

So the regulatory status of essentially the same business model can now depend on geography.

That is not merely inconvenient for lawyers.

It is a serious operational problem for companies trying to build national products.

Kalshi, Robinhood, Crypto.com, DraftKings, FanDuel, Coinbase and other companies have increasingly treated event contracts as a major commercial category. A national exchange model becomes considerably harder to operate if one federal appellate region effectively recognizes federal exclusivity while another permits state-by-state gambling enforcement.

And the issue reaches beyond licensing.

State sports-gambling regimes regulate matters such as age limits, collegiate wagering, self-exclusion, advertising, responsible-gaming requirements, tax obligations and—in some jurisdictions—tribal gaming rights.

If federal commodities law preempts those systems whenever the product sits on a CFTC-regulated exchange, prediction markets have found something close to a national regulatory pathway.

If it does not, operators may confront something much closer to the familiar sportsbook model:

fifty states, fifty sets of rules, and no shortcut around them.

There is another reason this fight is difficult.

Congress expressly addressed event contracts in Dodd-Frank.

Section 5c(c)(5)(C) of the Commodity Exchange Act gives the CFTC authority to review event contracts involving subjects including unlawful activity, terrorism, assassination, war and gaming, and to prohibit contracts it determines are contrary to the public interest.

The CFTC is also actively working through how that provision should apply to modern prediction markets, including sports-related products.

That language cuts in competing directions.

Prediction-market companies can argue that Congress expressly contemplated “gaming” inside the CFTC event-contract framework—evidence that the federal government, not fifty state regulators, decides whether those contracts may trade on registered markets.

States can respond that Congress’s decision to give the CFTC special authority over gaming-related contracts hardly proves that ordinary sports bets magically become swaps, much less that Congress silently displaced states’ longstanding gambling laws.

That disagreement sits at the center of the Third–Ninth Circuit divide.

And it is now sitting in cert petitions at the Supreme Court.

The Supreme Court has not agreed to hear the case.

That point matters.

Crypto.com filed a petition for a writ of certiorari. New Jersey and Robinhood have done the same. A petition asks the Court to take a case; it is not a grant of review.

As of this writing, reporting confirms Crypto.com’s September 11 filing, but a public Supreme Court docket number for that petition had not yet been confirmed in the sources reviewed for this alert.

Nor have the lower-court cases reached conventional final merits judgments after trial.

Both the Third and Ninth Circuit rulings arose from preliminary-injunction litigation. The courts necessarily analyzed the federal statutory questions, and they reached sharply conflicting answers, but the formal procedural question in each included whether the moving party had shown the necessary likelihood of success for temporary relief.

That nuance does not make the conflict unimportant.

It does mean the cleanest formulation is:

two federal appellate courts have reached opposite legal interpretations while deciding preliminary relief.

Supreme Court Rule 10 specifically identifies a conflict between federal courts of appeals on the same important federal question as one of the classic considerations supporting certiorari. It is not automatic, but this dispute now fits the shape of the kind of disagreement the Court often exists to resolve.

The stakes are national.

The legal question repeats across jurisdictions.

The same statutory provisions are producing incompatible appellate interpretations.

And litigation has already spread across a large number of states. New Jersey’s petition tells the Court that prediction-market disputes have drawn at least 20 states into litigation and describes the Third–Ninth Circuit conflict as direct and irreconcilable.

The Court could still wait.

Other appellate courts are considering related disputes. Kalshi has separately asked the Ninth Circuit to rehear its Nevada case en banc. And the Justices may prefer a different procedural vehicle after the law develops further.

But the argument for waiting is getting weaker as the practical split gets larger.

This is obviously important for Kalshi, Crypto.com and Robinhood.

It matters just as much to companies entering the market behind them.

Traditional sportsbooks need to know whether prediction exchanges will continue operating under a fundamentally different regulatory and tax structure. States need to know whether their sports-gambling statutes reach products that increasingly resemble the wagers those statutes regulate. Tribes need clarity about whether federally regulated event contracts can circumvent exclusivity arrangements built into tribal-state gaming frameworks.

Sports leagues have another set of concerns: integrity monitoring, insider information and prohibited participants become much harder to coordinate when products that economically resemble sports betting are governed under different regulatory systems.

And investors need to know whether the prediction-market business model is genuinely national—or ultimately another state-by-state gaming business.

That answer could materially affect the economics of the entire industry.

The next development is procedural but important.

The Supreme Court will docket and process the petitions, respondents will have opportunities to file briefs in opposition, and interested governments, tribes, gaming organizations, financial-market participants and other stakeholders may file amicus briefs.

The Justices can then deny review, grant one petition, potentially hold related petitions while deciding the preferred vehicle, or wait for further appellate development.

Meanwhile, the lower-court fight does not stop.

Kalshi is seeking rehearing in the Ninth Circuit. Litigation continues across multiple states. And operators must make business decisions now under a legal framework that may look dramatically different depending on where the customer lives.

So Friday did not settle the prediction-market fight.

It did something more important.

It put the question squarely in front of the only court that can give the country one answer.