NFL tells Supreme Court prediction market sports contracts are gambling, not swaps

What happened

The National Football League asked the U.S. Supreme Court to treat sports contracts on prediction markets as gambling rather than swaps, and urged the justices to take up the question before another season passes. The league filed an amicus brief backing New Jersey officials who petitioned the Court in Flaherty v. KalshiEX to review a Third Circuit ruling for Kalshi.

The Third Circuit ruled that Kalshi's sports contracts count as swaps under Dodd-Frank, which places them under the CFTC's exclusive jurisdiction. The Sixth and Ninth Circuits ruled the other way.

The league argues that Dodd-Frank's swap definition covers instruments used to hedge existing risk, not wagers that create risk mainly for gambling purposes. It also cites market size: on the first Sunday of this NFL season, $1.8 billion of the $3.3 billion traded across prediction markets was tied to the NFL, the brief says.

New Jersey's petition asks the Court to review a Third Circuit ruling that shielded Kalshi's sports contracts from state enforcement. The NFL's October 8 brief supports that request and argues that state oversight is needed for consumer protection and game integrity.

Why it matters

The core question is whether federal commodities law blocks states from applying their gaming laws to event contracts listed on a CFTC-registered market. The outcome affects where contracts can be offered, the age of users and which regulator can require changes.

The NFL's brief is an argument from an interested participant and creates no new federal rule. The justices have not agreed to hear the case or decided the merits, and a petition can be denied without a merits ruling.

Kalshi said its "top priority is the integrity of its markets" and that it works with other major U.S. sports leagues and integrity partners, including Major League Baseball and the NHL. The NFL counters that it has asked the CFTC and operators to ban contracts one person can easily manipulate, such as whether a kicker will miss a field goal, and contracts on injuries and officiating, and says they have declined.

What the data shows

• On the first Sunday of this NFL season, $1.8 billion of the $3.3 billion traded across prediction markets was tied to the NFL, the league's brief says.
• The CFTC has allowed 18-year-olds to trade sports contracts, while states generally set the minimum age at 21.
• Kalshi's response to the petition is due Nov. 9 on the Supreme Court docket.

Background

• The Third Circuit ruled for Kalshi in April, and later appellate decisions in other regions went the other way.
• Three federal appeals courts have taken different positions on state gaming authority, and the Supreme Court has given no sign that it supports the petition.
• Former CFTC Chairman Gary Gensler and former Sen. Chris Dodd, who sponsored Dodd-Frank, filed briefs on Thursday. Gensler wrote that Congress did not transfer jurisdiction over sports betting from the states to the CFTC.
• Dodd wrote that Congress did not set out to authorize nationwide sports betting through derivatives markets.

What is still unclear

• The justices have not agreed to hear the case or decided the merits.
• The NFL says it is unclear how Kalshi's monitoring system with integrity firm IC360 could work without the league's involvement.

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