US Supreme Court May Take Up Kalshi, Robinhood, and Crypto.com Prediction Market Fight

The Supreme Court could soon be asked to decide whether sports-based event contracts are federally regulated derivatives or just another form of gambling subject to state law. For operators and PSPs, that is not a theoretical argument: it determines which regulator can shut a product down, and on what basis.

1. With the Court starting its new term next week, the justices will decide whether to hear disputes involving Kalshi, Robinhood, and Crypto.com, all of which have moved into sports-related prediction contracts while states push back against that expansion.
2. The core legal question is simple on paper and messy in practice: prediction market operators say their contracts are financial derivatives overseen by the Commodity Futures Trading Commission (CFTC), while state regulators and attorneys general say sports-linked contracts are sports wagering and belong under state gambling laws.
3. The lower courts have already split. In April, the Third Circuit ruled in Kalshi’s favor against New Jersey, finding that federal law likely blocks the state from applying its regulations to Kalshi’s sports contracts. In August, the Ninth Circuit went the other way, allowing Nevada to enforce its gaming laws on sports event contracts offered by Kalshi, Crypto.com, and Robinhood.
4. The National Council of Legislators from Gaming States (NCLGS) asked the Supreme Court to step in as well. It filed an amicus brief supporting New Jersey’s petition for re-review and argued that states should keep control over gambling, warning that a ruling against state authority over sports event contracts could have broader consequences for the market.
5. The CFTC sits at the center of the fight. Prediction market companies argue that federal oversight gives the agency exclusive control over these contracts, and the regulator has so far backed operators, including by taking legal action against states that tried to restrict prediction platforms. The Trump administration has also supported that federal approach.

If the justices take the case, they will have to draw a line between federally regulated derivatives and state gambling enforcement. That line matters because once sports event contracts start looking like wagering to one regulator and derivatives to another, everyone in the payment chain gets to enjoy the compliance bill.