The U.S. Supreme Court has received several amicus briefs urging it to consider a case on whether sports-based prediction markets are classified as swaps under federal law.
What Happened
Several parties filed amicus briefs last week. They include former Senator Chris Dodd, former CFTC Chair Gary Gensler, the National Football League, and 39 U.S. states plus the District of Columbia.
These briefs argue that sports-related prediction markets are not financial swaps. They should be regulated at the state level, not by the CFTC.
Key Arguments
Chris Dodd stated in his brief that the Dodd-Frank Act did not give the CFTC power to override state gambling laws.
He challenged the Third Circuit’s ruling that such markets are swaps. He said parlay-based wagers don’t support hedging or price discovery.
Former CFTC Chair Gary Gensler agreed. He said the law does not grant the CFTC exclusive authority over all contracts.
The NFL said it has a stake in the outcome. It criticized the CFTC’s hands-off approach and the gap between state and federal gambling rules.
The CFTC released an interim final rule and a proposal on Friday. It defines a ‘swap’ to include event contracts for sports, politics, culture, and weather.
What Is a Swap?
Under the Commodity Exchange Act, a swap is a contract for future delivery or exchange of assets.
The CFTC says event contracts—like bets on sports outcomes—meet this definition.
Critics argue these markets are wagers, not financial derivatives.
Why It Matters
Appellate courts are split. Two have ruled sports prediction markets are gambling under state law. One upheld CFTC jurisdiction.
If the Supreme Court rules for states, it could let each state set its own rules. That would reduce federal oversight.
What to Watch Next
The Supreme Court has not yet announced whether it will hear the case.
Experts will watch the CFTC’s final rule and responses from Kalshi and other market operators.
Public interest remains high due to growing market popularity and possible state-level regulatory differences.
Source: State of Crypto, CoinDesk
For more on the CFTC’s regulatory approach, see CFTC Proposes to Classify Prediction Markets as Swaps.
Sources & further reading
Featured image: US Supreme Court.JPG by Photo by Mr. Kjetil Ree., CC BY-SA 3.0, via Wikimedia Commons. Image source · License
