NFL Tells Supreme Court Prediction Markets Are Gambling, Not Swaps
The NFL has filed an amicus brief at the U.S. Supreme Court, urging the justices to take up a case that could decide whether sports prediction contracts count as gambling or federally regulated swaps. The brief sides with New Jersey regulators, arguing that prediction market contracts are not swaps under the Commodity Exchange Act.
The Case at Hand
The case, Flaherty v. KalshiEX, LLC, centers on whether Kalshi's sports event contracts fall under the CFTC's exclusive jurisdiction or whether states can apply their own gambling laws to them. The NFL argues that Dodd-Frank's definition of a swap covers instruments that hedge existing risk — not bets that create new risk from scratch. Three federal appeals courts have ruled differently on the issue.
A Circuit Split Only the Supreme Court Can Fix
The Third Circuit found that Kalshi's sports contracts are swaps under the CFTC's exclusive jurisdiction, shielding them from state gambling laws. The Sixth and Ninth Circuits reached the opposite conclusion, creating a split that only the high court can resolve. Former U.S. Attorney General William Barr represents the league, which wants a ruling before the 2027 season.
Why the NFL Picked Sides
The league says it asked the CFTC and operators like Kalshi to ban easily manipulated contracts — those involving injuries, officiating, or outcomes knowable in advance — but they declined. The NFL also flagged that 18-year-olds can trade on Kalshi while most states require sports bettors to be 21, and that the CFTC has just 543 employees nationwide. Football-related contracts accounted for $1.8 billion of the $3.3 billion traded on prediction markets during the season's first Sunday.
What This Means for Crypto Traders
If the Supreme Court upholds the Third Circuit's ruling, prediction markets can keep offering sports contracts nationwide under federal CFTC oversight. If the Sixth and Ninth Circuits prevail, states can apply their own gambling laws — potentially fragmenting the market and forcing platforms to geoblock users in restrictive states. For DeFi and crypto-native traders, the outcome could reshape which markets are accessible and under what rules.