The National Football League filed an amicus brief with the U.S. Supreme Court on October 8, 2026, urging the justices to hear New Jersey's challenge to the federal classification of sports prediction market contracts. The brief frames Kalshi's event contracts as gambling products, not CFTC-regul...
The National Football League filed an amicus brief with the U.S. Supreme Court on October 8, 2026, urging the justices to hear New Jersey's challenge to the federal classification of sports prediction market contracts. The brief frames Kalshi's event contracts as gambling products, not CFTC-regulated swaps, and arrives amid a three-way circuit split that has left the $325 billion prediction market industry operating under contradictory rules depending on jurisdiction.
The filing lands at a moment when prediction markets have become one of the fastest-growing segments of the financial system. Combined monthly volume across Kalshi and Polymarket rose from under $5 billion in September 2025 to more than $50 billion by July 2026. Kalshi alone processed $173 billion in trades through late August 2026. Sports contracts now account for 80% of Kalshi's trading volume. On the first Sunday of the 2026 NFL season, $1.8 billion in prediction market volume — more than half the day's total — was tied to football.
The jurisdictional question has real economic stakes: Kalshi raised $1 billion at a $22 billion valuation in May 2026 and is seeking another $1 billion at $40 billion. Polymarket closed $1 billion at $21 billion in September. MLB, NHL, and MLS have signed partnership deals worth hundreds of millions. A Supreme Court ruling classifying sports event contracts as gambling would re-route the entire industry through state-by-state licensing regimes, voiding existing deals and potentially stranding billions in open interest.
Three federal appeals courts have reached irreconcilable conclusions on whether sports prediction contracts are federally preempted financial products or state-regulated gambling.
Third Circuit (April 6, 2026): Ruled 2-1 for Kalshi against New Jersey. The court held that sports event contracts fit within the federal definition of swaps under the Commodity Exchange Act, placing them under the CFTC's exclusive jurisdiction. State gambling laws, the majority wrote, are preempted.
Ninth Circuit (August 28, 2026): Ruled 3-0 against Kalshi in a Nevada case. The court reached the opposite conclusion, finding that the CFTC's jurisdiction over event contracts does not bar states from enforcing their own gambling statutes.
Sixth Circuit (September 25, 2026): Ruled against Kalshi in consolidated Ohio and Tennessee cases. The court held that Kalshi's sports event contracts are not "swaps" under the CEA and that state gambling prohibitions apply. The ruling upheld the denial of injunctions Kalshi had sought in both states.
The result: Kalshi can legally offer sports contracts in the Third Circuit's territory (New Jersey, Pennsylvania, Delaware) but faces enforcement in states covered by the Ninth Circuit (Nevada, California, Oregon) and the Sixth Circuit (Ohio, Tennessee, Kentucky, Michigan). Thirty-nine states have backed New Jersey's petition asking the Supreme Court to resolve the split.
The NFL's 30-page brief, filed through former U.S. Attorney General William Barr, makes four core arguments.
Classification. Sports event contracts function identically to sports wagers: a participant pays money, picks an outcome, and receives a payout if correct. The NFL argues this is gambling by any functional definition, regardless of how the CFTC categorizes the instrument.
Manipulation risk. The league identifies specific contract types it considers vulnerable: missed field goals, player injuries, officiating decisions, and individual plays. A kicker could intentionally miss. A receiver could fumble. The brief states that the NFL requested Kalshi ban these markets and implement a minimum trading age of 21. According to the filing, both the CFTC and platform operators declined.
Regulatory capacity. The NFL notes the CFTC has 543 employees nationwide — a fraction of the staffing available to state gaming commissions that collectively regulate a $66 billion U.S. sports betting market. The brief describes existing insider-trading policies on prediction platforms as "paper tigers."
Urgency. The NFL asks for resolution before the 2027 season, warning that each passing year compounds the integrity risk as volumes grow.
Former SEC and CFTC Chair Gary Gensler and former Senator Christopher Dodd also filed briefs supporting New Jersey's petition.
The prediction market industry has grown from a niche experiment to a multi-hundred-billion-dollar market in under 18 months.
| Metric | Figure | Source | |--------|--------|--------| | Combined monthly volume (July 2026) | $53.0 billion | Pew Research | | Combined monthly volume (Sept. 2025) | <$5 billion | Pew Research | | Kalshi cumulative trades (through Aug. 2026) | $173 billion | Fortune | | Kalshi annualized revenue (July 2026) | ~$4 billion | Sacra/Dealroom | | Kalshi fee revenue (2025 full year) | $263.5 million | Sacra | | Polymarket all-time fees | $330.79 million | DefiRate | | Polymarket 30-day fees | $63.83 million | DefiRate | | Sports share of Kalshi volume | 80% | Fortune | | NFL share of opening Sunday volume | $1.8B of $3.3B | NFL amicus brief | | Bernstein projected market opportunity | $10 trillion | Decrypt |
Kalshi raised $1 billion at a $22 billion valuation in its May 2026 Series F, led by Coatue with participation from Sequoia, Andreessen Horowitz, Paradigm, Morgan Stanley, and ARK Invest. According to CoinDesk, the company is currently in talks for another $1 billion round at a $40 billion valuation, led by Sequoia and Wellington Management.
Polymarket closed a separate $1 billion round at $21 billion in September 2026. Between the two platforms, over $2 billion in venture capital is now directly exposed to the outcome of the Supreme Court case.
The professional sports world is not unified on prediction markets.
Against (supporting state regulation):
For (embracing prediction markets through commercial deals):
Every league partnership deal includes a clause voiding it if courts ultimately classify prediction market contracts as gambling.
In June 2026, the CFTC released a 267-page notice of proposed rulemaking that would formally allow sports event contracts on CFTC-regulated exchanges, with restrictions.
Permitted: Final scores, point differentials, win-loss results, tournament advancement, individual or team statistical performance, season-long performance metrics.
Prohibited: Contracts on a specific play called for or executed by a specific player or team (single pitch, single shot, single foul), physical fights during games, injuries, officiating decisions, pre-collegiate sports events.
Gray area: Contracts on events involving chance "that can also be significantly affected" by participant skill, such as poker tournaments, would potentially be allowed.
The proposed rule represents the CFTC's attempt to establish a federal framework before the Supreme Court potentially removes its jurisdiction. If the Court rules that sports event contracts are gambling, the rulemaking becomes moot.
Two pieces of legislation are advancing through Congress on parallel tracks.
Prediction Markets Are Gambling Act (S.4160 / H.R.9856): Introduced March 23, 2026, by Senators John Curtis (R-UT) and Adam Schiff (D-CA), with a House companion introduced July 22, 2026 by Representatives Steven Horsford (D-NV) and Mark Amodei (R-NV). The bill would amend the Commodity Exchange Act to prohibit CFTC-registered platforms from listing sports or casino-style event contracts. Status: introduced, referred to committee. No floor votes scheduled.
The bipartisan, bicameral sponsorship is notable: both Nevada legislators co-sponsoring the House bill represent a state whose $17.5 billion sports betting industry faces direct competitive pressure from prediction markets.
Polymarket, the largest crypto-native prediction market, operates its international exchange on Polygon, settling in USDC. Its domestic U.S. product operates separately under CFTC authorization. The Supreme Court case directly threatens both models.
If sports contracts are classified as gambling:
If the CFTC's jurisdiction is upheld:
The case also carries precedent implications beyond sports. If the Court establishes that states can override CFTC classification of event contracts, the reasoning could extend to other CFTC-regulated crypto instruments — including perpetual futures, options on digital assets, and tokenized derivatives that blur the line between investment and speculation.
The CFTC opened a broad investigation into Polymarket in 2026, expanding beyond individual insider-trading cases to examine market integrity, anti-manipulation controls, and whether Polymarket's offshore structure circumvents U.S. regulatory requirements.
The prediction market industry has outgrown the legal framework that enabled it. In 18 months, combined trading volume increased roughly tenfold. Two platforms now command valuations above $20 billion. Sports — the very category at legal issue — drives the majority of volume.
The NFL's brief frames the core tension plainly: the same transaction that the CFTC calls a swap, and that Kalshi calls a financial product, functions identically to what state gambling commissions have regulated for decades. Three circuit courts have failed to agree on which label applies. Only the Supreme Court can resolve it.
The financial exposure is concentrated. Over $2 billion in venture capital, hundreds of millions in league partnership value, and the operational models of both Kalshi and Polymarket hinge on whether nine justices classify these contracts as finance or gambling. Their answer will determine whether prediction markets remain a federally unified market or fracture into a patchwork of state licensing regimes — and whether crypto-native platforms like Polymarket retain their current operating latitude.
Kalshi's response is due November 9. The Court's decision on whether to take the case could come by year-end.