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The NFL moved to support New Jersey’s petition asking the U.S. Supreme Court to review a ruling that shields sports-related prediction market contracts from state gambling laws.
In an amicus brief filed Oct. 8, the league supported New Jersey’s challenge to a Third Circuit ruling in favor of prediction markets company Kalshi. The decision held that sports-event contracts traded on Kalshi’s federally regulated exchange are “swaps” under the Commodity Exchange Act. That designation gives the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction and, per the court’s reasoning, preempts state gambling regulation.
The NFL argues that the contracts are essentially sports betting, regardless of how they are classified. In its brief, the league described sports prediction markets as a “new form of sports betting” that threatens the integrity of sporting events. The league wants the Supreme Court to clarify that states retain authority to regulate sports wagering offered through prediction markets, including licensing, age restrictions and integrity safeguards.
States back challenge to Kalshi ruling
The filing came one day after 39 other states and the District of Columbia filed their own brief supporting New Jersey. The states told the Court that lower courts are sharply divided over whether federal commodities law preempts state gambling statutes, creating what they described as a nationwide “turf war” between state regulators and the CFTC.
The Third Circuit ruled against New Jersey in April. But the Ninth Circuit held that sports-related contracts are not swaps and that state gambling laws are not preempted, while the Sixth Circuit reached a similar conclusion in cases involving Ohio and Tennessee. Related disputes remain pending in five other federal appeals courts and before Massachusetts’ highest court.
NFL questions federal oversight of sports event contracts
The NFL said the CFTC is not equipped to police sports betting, stating that “while states vary in their sports gambling restrictions, there is a substantial gulf between state and federal integrity-protection measures.” The league noted that the agency has 543 employees, while state gambling regulators employ thousands nationwide.
The league also called for a 21-and-over age limit, limits on bets “highly susceptible to manipulation,” and protections against betting by people with nonpublic information. It sharply criticized the insider trading and event manipulation policies of prediction market companies, calling them “paper tigers.” Without coordinating with sports leagues to identify people who have access to nonpublic information, prediction market companies can’t effectively prevent insider trading, according to the NFL.
Kalshi’s response to New Jersey’s petition is due Nov. 9, and the Supreme Court is unlikely to decide whether to hear the case before December. The outcome could determine whether sports prediction contracts remain available nationwide under federal oversight or become subject to state gambling laws that govern traditional sportsbooks.
