Crypto.com’s North American Derivatives Exchange filed a petition with the U.S. Supreme Court on September 11, asking the justices to decide whether sports-event prediction contracts fall under federal derivatives law or remain subject to state gambling regulation. Robinhood also filed a separate petition seeking review of a Ninth Circuit decision tied to Nevada. As of publication, the Supreme Court had not agreed to hear either case.
Both filings focus on a jurisdictional conflict between federal commodities law and state gambling regulation. Crypto.com argues that federally regulated prediction markets should remain under Commodity Futures Trading Commission oversight. Robinhood similarly argues that its sports-related event contracts belong within federal derivatives regulation rather than state gambling law.
A Widening Circuit Split
The legal split over prediction-market classification has developed as federal appeals courts reached different conclusions. The Third Circuit found that Kalshi’s sports contracts fall within federal derivatives regulation, supporting the industry’s preemption argument. The Ninth Circuit reached the opposite result, ruling that sports-event contracts do not qualify as swaps under the Commodity Exchange Act and rejecting arguments that federal law preempts Nevada’s gambling rules.
The Ninth Circuit also concluded that existing CFTC rules prohibit designated contract markets from listing contracts involving gaming. That conclusion presents an obstacle for operators seeking to offer sports-event products through federally regulated exchanges instead of state-licensed sportsbooks.
Kalshi and New Jersey Add Pressure
The dispute also includes Kalshi, the CFTC and New Jersey. Kalshi has requested an en banc rehearing in the Ninth Circuit after the panel ruled against its sports contracts. The CFTC joined Kalshi in challenging the court’s reading of the agency’s regulatory framework. New Jersey filed its own Supreme Court petition involving Kalshi and argues that sports prediction-market contracts should remain subject to state gambling laws, a position that conflicts with the operators’ arguments.
The issue has practical implications for how sports-event contracts may be offered. Robinhood has partnered with Crypto.com and OG.com to route certain football contracts through a federally regulated exchange, making the legal question important to those products.
Penalty or Outcome
The Supreme Court has not agreed to hear the petitions and has issued no final outcome in the matters. If the Court takes one or more cases, its decision could address whether sports prediction markets are treated primarily as federally regulated financial products or as offerings that states may regulate under gambling law. For now, the competing petitions leave that question unresolved.
Source: PlayUSA, based on reporting by Jonathan Rodriquez for Betting News
Petra Vanhoof has spent the better part of a decade following the shifting tides of gambling regulation across Europe and beyond. She came up through the compliance side of the industry before pivoting to writing, which gives her a grounded, no-nonsense perspective on the rules, loopholes, and political maneuvering that shape how operators actually do business. She is particularly drawn to the gap between what regulators say and what the market ends up doing in response.