The CFTC has issued an interim final rule and a separate proposal on event contracts, adding regulatory action to a dispute that states, the NFL and others are urging the U.S. Supreme Court to hear. The justices have not said whether they will take up the fight over whether sports-based contracts fall under federal swaps oversight or state gambling laws.
The competing arguments over state authority and Kalshi’s contracts arrive alongside an appellate split. The outcome could affect whether prediction-market operators can rely on a federal regulatory framework or face state gambling rules.
Briefs and CFTC action put focus on federal authority
Among those filing briefs urging Supreme Court review were former Senator Chris Dodd, former CFTC and SEC Chair Gary Gensler, the NFL, 39 states and the District of Columbia, and 145 tribal nations. Most of the briefs argued that sports-related prediction products should be treated as gambling rather than swaps regulated by the CFTC.
The CFTC’s two actions take different procedural forms: one is already in effect, while the other remains a proposal. The agency’s stated position is that casino-style gambling falls outside the swap definition, but event contracts remain within it. Its proposal would expressly include contracts tied to sports, politics, cultural events and weather.
Dodd’s brief argued that Dodd-Frank was not intended to let the CFTC displace state and tribal authority over gambling. It also rejected the idea that a contract’s listing on a federally registered exchange automatically shields it from state law:
“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. Rather, it identifies the CFTC as the federal regulator of covered financial instruments,” Dodd’s brief said.
Appellate courts disagree on sports contracts
The dispute turns on whether sports-related prediction products are financial derivatives or wagers. One appellate court ruled that the CFTC has jurisdiction over swaps and prediction markets covering sports. Two others treated sports-related prediction markets as gambling products for states to regulate, creating a split that supporters of Supreme Court review say warrants the justices’ attention.
The conflicting appellate rulings on prediction markets leave operators facing different conclusions about state enforcement. In the court case at issue, the Third Circuit ruled 2-1 that the CFTC had jurisdiction over the contracts. Most of the briefs now before the Supreme Court urge it to side with states instead.
Dodd’s filing distinguished derivatives used to manage commercial risk from sports wagers, arguing that parlays combining bets on spreads or player performances do not support hedging or price discovery. It also said the CFTC’s exclusive jurisdiction over covered financial instruments does not amount to blanket preemption of state and tribal gambling laws.
Gensler made a similar argument, contending that Dodd-Frank did not give the CFTC authority to override state gambling laws. The agency’s position, as described in its actions, is that event contracts fit the swap definition even though casino-style gambling does not.
NFL raises concerns about oversight
The NFL said it has a direct interest in the case because of sports betting’s connection to the league. Its brief criticized what it characterized as the CFTC’s “laissez-faire” approach and pointed to the difference between state gambling regulators and the federal oversight of designated contract markets.
That disagreement extends beyond the legal classification of a contract. The league’s position is that the federal framework may not provide the same approach to gambling safeguards as state regulation, while the CFTC maintains that event contracts fall within its remit.
The Supreme Court has yet to decide whether it will hear the dispute. Kalshi’s deadline to file its response is Nov. 9, 2026; meanwhile, the CFTC’s interim final rule is in effect and its separate proposal remains under consideration.
The post CFTC Rule Puts Sports Event Contracts at Center of Court Fight appeared first on ReadWrite.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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